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U.S. natgas futures gain 1% ahead of contract expiry

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U.S. natural gas futures on Monday closed up about 1%, rebounding on the coming

expiration of the front-month contract despite forecasts for milder weather that sent them down early in the

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session to their lowest since July 15.

Front-month gas futures rose 7.5 cents, or 1.1%, to settle at $6.903 per million British

thermal units (mmBtu), after sliding to a session low of $6.526 on moderating temperatures, marginal increase

in production and recession concerns.

“It’s kind of a rally after all that selling, all the south movement to lower prices,” said Thomas

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Saal, senior vice president for energy at StoneX Financial Inc.

“The contract expires on Wednesday, so you’re going to have some liquidation starting today.”

Data provider Refinitiv forecasted 76 cooling degree days (CDDs) over the next fortnight, down from their

estimate of 88 CDDs on Friday. CDDs, used to estimate demand to cool homes and businesses, measure the number

of degrees a day’s average temperature is above 65 Fahrenheit (18 Celsius).

Hurricane Ian was expected to produce wind and storm surge impacts in western Cuba, the National Hurricane

Center (NHC) said on Monday.

Ian could bring rain to the southeast United States, which could hit gas demand, Saal said, but prices

should find technical support near $6.40-$6.50.

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Analysts at Gelber & Associates said in a note: “Powerburn and LNG export demand has also been higher

versus last year, despite the Freeport LNG export facility outage. When Freeport starts to become operational

again in November, LNG export demand will likely hit record highs above 14 Bcf/d, which will mitigate

additional dry gas production gains.”

The second-biggest U.S. LNG export plant was consuming about 2 bcfd of gas before it shut on June 8.

Freeport expects at least partial service to resume in early to mid-November.

“Although today’s strong rebound may have offered some comfort to the bulls, we feel that it is

premature to suggest that a price bottom has been achieved as we leave the door open for a further decline to

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about the $6.35 area,” energy consulting firm Ritterbusch and Associates said in a note.

Week ended Week ended Year ago Five-year

Sep 23 Sep 16 Sep 23 average

(Forecast) (Actual) Sep 23

U.S. weekly natgas storage change (bcf): +86 +103 +86 +77

U.S. total natgas in storage (bcf): 2,960 2,874 3,157 3,283

U.S. total storage versus 5-year average -9.8% -10.4%

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 6.84 7.18 5.11 3.73 2.89

Title Transfer Facility (TTF) 49.31 53.11 22.61 16.04 7.49

Japan Korea Marker (JKM) 37.57 39.91 23.35 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

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Norm Norm

U.S. GFS HDDs 55 53 24 63 77

U.S. GFS CDDs 76 88 89 85 73

U.S. GFS TDDs 131 141 113 148 150

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 98.3 98.7 99.0 93.5 87.0

U.S. Imports from Canada 8.0 7.8 7.5 8.3 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 106.2 106.4 106.5 101.8 95.8

U.S. Demand (bcfd)

U.S. Exports to Canada 2.1 1.9 1.9 2.0 2.4

U.S. Exports to Mexico 5.5 5.6 5.5 5.7 5.3

U.S. LNG Exports 11.5 11.5 11.0 10.3 4.9

U.S. Commercial 4.8 5.3 5.3 5.0 4.9

U.S. Residential 3.9 5.0 4.8 4.3 3.9

U.S. Power Plant 36.4 32.4 32.0 29.8 33.2

U.S. Industrial 21.3 21.7 21.4 20.7 21.2

U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9

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U.S. Pipe Distribution 1.9 1.9 1.9 1.9 2.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 73.3 71.4 70.4 66.7 70.3

Total U.S. Demand 92.4 90.3 88.8 84.7 82.9

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

Week ended Week ended Week ended Week ended Week ended

Sep 30 Sep 23 Sep 16 Sep 9 Sep 2

Wind 9 10 8 6 7

Solar 4 3 3 3 3

Hydro 5 5 5 6 5

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 39 41 42 45 44

Coal 19 19 19 21 21

Nuclear 21 19 19 18 17

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

Hub Current Day Prior Day

Henry Hub 6.75 7.76

Transco Z6 New York 3.74 5.50

PG&E Citygate 7.30 8.01

Dominion South 3.76 5.47

Chicago Citygate 4.92 6.38

Algonquin Citygate 4.07 5.85

SoCal Citygate 5.75 6.82

Waha Hub 3.76 4.88

AECO 4.16 4.25

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

Hub Current Day Prior Day

New England 38.50 63.00

PJM West 45.75 66.25

Ercot North 52.25 83.00

Mid C 139.00 59.25

Palo Verde 58.75 70.50

SP-15 60.25 72.25

(Reporting by Bharat Govind Gautam and Kavya Guduru in Bengaluru; Editing by Kirsten Donovan and David

Gregorio)

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