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U.S. natgas drops as less demand forecast at robust output levels

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U.S. natural gas futures slipped on Wednesday as forecasts for less cold weather

than previously feared lowered demand expectations for heating, while robust production levels further weighed

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on the market.

Front-month gas futures for January delivery fell 30.5 cents, or 4.2%, to settle at $6.930 per

million British thermal units, having dropped over 5% earlier to a session low of $6.806.

“The forecasts appear to be kind of waffling a little bit back and forth on some cold weather expected

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around the corner, but we just don’t know when it’s going to show up,” said Thomas Saal, senior vice president

for energy at StoneX Financial Inc.

Data provider Refinitiv forecast 406 heating degree days (HDDs), which are used to estimate demand to heat

homes and businesses, over the next two weeks in the Lower 48 U.S. states, is slightly lower than the outlook

on Tuesday.

“For now, the near-term temperature outlook isn’t intensely cold enough to spark any concerns about a

widening of the storage deficit,” analysts at energy consulting firm Gelber & Associates said in a note

Refinitiv said average gas output in the U.S. Lower 48 states has risen to 99.6 bcfd in November, up from

99.4 bcfd in October.

“Production remains on the upswing with a record pace still on the table in providing an upside price

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limiter,” energy consulting firm Ritterbusch and Associates said in a note.

However, U.S. gas futures ended the month over 9% higher. Prices are also up about 90% so far this year as

much higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to

Russia’s invasion of Ukraine.

Meanwhile, Freeport LNG has said it plans to start producing LNG again in mid-December and reach full

capacity of about 2.1 billion cubic feet per day (bcfd) in March.

Freeport LNG, however, has not yet submitted a request to restart the plant to the U.S. Department of

Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), sources familiar with the

company’s filings have told Reuters.

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The plant was shut on June 8 due to an explosion caused by inadequate operating and testing procedures,

human error and fatigue, according to a report by consultants hired by the company to review the incident and

propose corrective actions.

Week ended Year ago Five-year

Week ended Nov 18 Nov 25 average

Nov 25 (Actual) Nov 25

(Forecast)

U.S. weekly natgas storage -80 -54 -34

change (bcf): -84

U.S. total natgas in storage 3,564 3,572 3,569

(bcf): 3,480

U.S. total storage versus -1.1%

5-year average -2.5%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2021 (2017-2021)

Henry Hub 7.26 7.28 5.12 3.73 2.89

Title Transfer Facility (TTF) 38.55 39.61 27.71 16.04 7.49

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Japan Korea Marker (JKM) 30.51 30.28 32.98 18.00 8.95

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

U.S. GFS HDDs 406 410 305 347 370

U.S. GFS CDDs 6 8 8 6 5

U.S. GFS TDDs 412 418 313 353 375

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 100.1 100.3 100.6 96.3 89.6

U.S. Imports from Canada 91.5 8.5 9.0 9.5 8.2

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 109.2 108.8 109.6 105.8 97.9

U.S. Demand (bcfd)

U.S. Exports to Canada 3.3 3.4 3.5 3.4 2.9

U.S. Exports to Mexico 5.3 5.6 5.6 5.8 5.1

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U.S. LNG Exports 12.0 11.9 12.8 11.8 6.4

U.S. Commercial 15.4 13.7 15.7 12.7 11.5

U.S. Residential 25.3 22.2 26.3 19.5 17.2

U.S. Power Plant 31.4 27.3 29.0 28.5 26.0

U.S. Industrial 25.3 24.5 25.2 23.5 24.0

U.S. Plant Fuel 4.9 5.0 5.0 5.0 4.9

U.S. Pipe Distribution 2.8 2.5 2.8 2.5 2.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 105.2 95.2 104.0 91.8 85.8

Total U.S. Demand 125.8 116.2 125.9 112.8 100.2

U.S. weekly power generation percent by fuel – EIA

Week ended Week ended Week ended Week ended Week ended

Dec 2 Nov 25 Nov 18 Nov 11 Nov 4

Wind 14 9 9 15 12

Solar 2 2 3 3 3

Hydro 6 6 7 6 5

Other 2 2 2 3 2

Petroleum 0 0 0 0 0

Natural Gas 33 39 41 38 39

Coal 20 20 18 16 18

Nuclear 23 20 20 20 20

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 6.03 6.00

Transco Z6 New York 6.30 5.45

PG&E Citygate 16.22 12.67

Dominion South 5.90 5.19

Chicago Citygate 6.44 5.36

Algonquin Citygate 6.61 5.79

SoCal Citygate 14.38 11.08

Waha Hub 5.56 5.21

AECO 7.07 4.94

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior Day

New England 64.25 73.75

PJM West 60.50 54.50

Ercot North 53.00 45.50

Mid C 160.00 162.62

Palo Verde 130.00 110.75

SP-15 129.25 117.25

(Reporting by Kavya Guduru in Bengaluru; additional reporting by Swati Verma; Editing by Will Dunham and Diane

Craft)

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