Home Business U.S. natgas eases 1% as Texas Freeport LNG outage reduces demand

U.S. natgas eases 1% as Texas Freeport LNG outage reduces demand

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U.S. natural gas futures slid about 1% on Friday on forecasts for less demand this

week than previously expected due in part to the shutdown of the Freeport liquefied natural gas (LNG) export

plant in Texas, which freed up more fuel for utilities to inject into storage.

The Freeport shutdown and cooler weather from thunderstorms also helped prevent peak power demand in Texas

from breaking the all-time high so far this week, analysts at EBW analytics said in a report. The state’s grid

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operator forecast that demand would hit record levels on Friday and Monday.

Analysts projected that the Freeport shutdown would reduce the amount of gas available to the rest of the

world, especially in Europe where much of the gas has gone in recent months as countries look to wean

themselves off Russian supplies after Moscow’s invasion of Ukraine.

But leaving more gas in the United States should give utilities a chance to rebuild extremely low U.S.

stockpiles more quickly. Freeport, the second-biggest U.S. LNG export plant, consumes about 2 billion cubic

feet per day (bcfd) of gas, so a three-week shutdown would result in about 42 billion cubic feet (bcf) more

gas being available to the U.S. market.

U.S. storage was currently about 15%, or 340 bcf, below normal levels for this time of year, its lowest

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since April 2019.

Front-month gas futures for July delivery fell 11.3 cents, or 1.3%, to settle at $8.850 per million

British thermal units (mmBtu).

For the week, the contract was on track to gain about 4% after falling about 2% last week.

U.S. gas futures were up about 135% so far this year as much higher prices in Europe and Asia keep demand

for U.S. LNG exports strong, especially since Russia’s Feb. 24 invasion of Ukraine stoked fears Moscow might

cut gas supplies to Europe.

Gas was trading around $26 per mmBtu in Europe and $23 in Asia.

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U.S. futures lag far behind global prices because the United States is the world’s top producer with all

the gas it needs for domestic use, while capacity constraints inhibit additional LNG exports.

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Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 94.8 bcfd so far in

June from 95.1 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021.

With hotter weather coming, Refinitiv projected that average U.S. gas demand, including exports, would

rise from 89.4 bcfd this week to 93.0 bcfd for the next two weeks. The forecast for this week was lower than

Refinitiv’s outlook on Thursday.

The average amount of gas flowing to U.S. LNG export plants fell to 12.2 bcfd so far in June from 12.5

bcfd in May, according to data from Refinitiv. That compares with a monthly record of 12.9 bcfd in March. The

seven big U.S. export plants can turn about 13.6 bcfd of gas into LNG.

With the shutdown of Freeport, LNG feedgas fell from a recent high of 12.9 bcfd on Tuesday to around 10.6

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bcfd on Thursday, the lowest since late February. It was on track to rise to 10.9 bcfd on Friday. Freeport was

pulling in about 2.0 bcfd before the shutdown.

Week ended Week ended Year ago Five-year

Jun 10 Jun 3 Jun 10 average

(Forecast) (Actual) Jun 10

U.S. weekly natgas storage change (bcf): +90 +97 +28 +79

U.S. total natgas in storage (bcf): 2,089 1,999 2,425 2,418

U.S. total storage versus 5-year average -13.6% -14.5%

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 9.05 8.96 3.27 3.73 2.89

Title Transfer Facility (TTF) 26.20 26.33 10.27 16.04 7.49

Japan Korea Marker (JKM) 23.16 22.76 11.58 18.00 8.95

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

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

Norm Norm

U.S. GFS HDDs 9 9 5 15 14

U.S. GFS CDDs 192 197 182 150 154

U.S. GFS TDDs 201 206 187 165 168

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 95.5 94.9 95.1 93.1 84.6

U.S. Imports from Canada 7.4 7.9 7.7 7.8 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 102.9 102.8 102.8 99.9 92.4

U.S. Demand (bcfd)

U.S. Exports to Canada 2.7 2.6 2.5 2.2 2.2

U.S. Exports to Mexico 6.0 6.1 6.2 6.7 5.1

U.S. LNG Exports 12.8 12.2 11.2 9.2 4.3

U.S. Commercial 4.6 4.5 4.4 4.5 4.7

U.S. Residential 4.1 3.9 3.7 3.8 4.3

U.S. Power Plant 28.2 32.7 37.5 36.1 32.8

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U.S. Industrial 20.7 20.7 20.8 20.6 20.9

U.S. Plant Fuel 4.7 4.7 4.7 4.7 4.7

U.S. Pipe Distribution 1.7 1.8 1.9 1.7 1.8

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 64.2 68.5 73.2 71.5 69.3

Total U.S. Demand 85.7 89.4 93.1 89.6 80.9

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

Week ended Week ended Week ended Week ended Week ended

Jun 10 Jun 3 May 27 May 20 May 13

Wind 9 12 12 12 15

Solar 5 4 4 4 4

Hydro 8 7 7 7 7

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 40 36 37 37 34

Coal 20 19 20 20 18

Nuclear 20 19 19 19 19

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

Hub Current Day Prior Day

Henry Hub 8.16 9.43

Transco Z6 New York 7.37 8.35

PG&E Citygate 9.27 10.30

Dominion South 7.16 8.26

Chicago Citygate 7.89 9.02

Algonquin Citygate 7.51 8.60

SoCal Citygate 9.69 10.50

Waha Hub 7.67 8.80

AECO 6.00 6.76

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

Hub Current Day

New England 68.25 83.25

PJM West 91.50 93.00

Ercot North 141.25 105.50

Mid C 7.67 42.50

Palo Verde 92.75 113.20

SP-15 90.00 96.75

(Reporting by Scott DiSavino; Editing by Mark Porter and David Gregorio)

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