Home Business U.S. natgas rises 4% on oil price gain, forecasts for higher demand

U.S. natgas rises 4% on oil price gain, forecasts for higher demand

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U.S. natural gas futures rose about 4% on Monday from a one-year low in the prior

session with a jump in oil futures and forecasts for slightly more heating demand next week than previously

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expected.

Oil futures rose more than 3% after China’s move to reopen its borders boosted the outlook for fuel

demand and overshadowed global recession concerns.

Front-month gas futures for February delivery rose 14.5 cents, or 3.95%, to $3.855 per million

British thermal units (mmBtu) at 8:48 a.m. EST (1348 GMT). On Friday, the contract closed at its lowest since

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Dec. 30, 2021.

That keeps the gas contract in technically oversold territory, with a relative strength index (RSI) below

30 for an eighth day in a row for the first time since February 2018.

After posting its worst start to a year on record, U.S. gas futures were still down about 14% so far this

year after rising 20% in 2022.

That gas price drop caused gas speculators last week to boost their net short futures and options positions

on the New York Mercantile and Intercontinental Exchanges for a third week in a row to their highest since

October 2022, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.

In the spot market, meanwhile, next-day gas for Monday at the U.S. Henry Hub benchmark in

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Louisiana fell to $3.43 per mmBtu, its lowest since December 2021.

Traders said the market’s biggest uncertainty remains when Freeport LNG will restart its liquefied natural

gas (LNG) export plant in Texas.

After several delays from October to November and then to December, Freeport now expects the facility to

return in the second half of January, pending regulatory approvals.

Analysts have long been saying that Freeport would likely return during the first or second quarter of 2023

because the company still has a lot of work to do to satisfy federal regulators, including training staff in

new procedures, before restarting the plant.

Whenever Freeport returns, U.S. demand for gas will jump. The plant can turn about 2.1 billion cubic feet

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per day (bcfd) of gas into LNG, which is about 2% of U.S. daily production.

Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing

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

suggest corrective actions.

Several vessels, including Prism Diversity, Prism Courage, Prism Agility and Elisa Larus, have been waiting

in the Gulf of Mexico to pick up LNG from Freeport, some since early November.

Other ships were sailing toward the plant, including Corcovado LNG, which is expected to arrive in

mid-January, and Prism Brilliance, Kmarin Diamond and Wilforce expected in late January.

U.S. GAS OUTPUT RISING

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Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 98.3 bcfd so far in

January, up from 96.7 bcfd in December. That compares with a monthly record of 99.9 bcfd in November 2022.

With the weather expected to remain warmer-than-normal through late January, Refinitiv projected average

U.S. gas demand, including exports, would ease from 121.2 bcfd this week to 120.7 bcfd next week. The forecast

for this week was lower than Refinitiv’s outlook on Friday, while its forecast for next week was higher.

The average amount of gas flowing to U.S. LNG export plants rose to 12.1 bcfd so far in January, up from

11.9 bcfd in December. That compares with a monthly record of 12.9 bcfd in March 2022.

Week ended Week ended Year ago Five-year

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Jan 6 Dec 30 Jan 6 average

(Forecast) (Actual) Jan 6

U.S. weekly natgas storage change (bcf): -31 -213 -183 -151

U.S. total natgas in storage (bcf): 2,860 2,891 3,016 2,948

U.S. total storage versus 5-year average -3.0% -6.7%

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

Last Year Average Average

2022 (2018-2022)

Henry Hub 3.86 3.71 4.26 6.54 3.60

Title Transfer Facility (TTF) 22.24 21.12 28.25 40.50 14.39

Japan Korea Marker (JKM) 28.45 28.85 28.53 34.11 14.31

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 352 350 474 442 446

U.S. GFS CDDs 2 2 2 3 3

U.S. GFS TDDs 354 352 476 445 449

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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 98.5 98.4 98.4 94.3 88.8

U.S. Imports from Canada 7.8 8.6 8.7 10.0 9.4

U.S. LNG Imports 0.0 0.0 0.0 0.1 0.4

Total U.S. Supply 106.3 106.9 107.2 104.4 98.6

U.S. Demand (bcfd)

U.S. Exports to Canada 3.2 2.7 2.8 2.8 2.8

U.S. Exports to Mexico 4.9 5.1 5.0 5.8 5.3

U.S. LNG Exports 11.8 12.4 12.4 12.5 7.2

U.S. Commercial 12.6 14.7 14.7 18.1 17.1

U.S. Residential 20.0 23.8 24.0 30.3 29.8

U.S. Power Plant 27.3 30.2 29.4 29.2 28.5

U.S. Industrial 23.7 24.6 24.6 25.4 25.6

U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9

U.S. Pipe Distribution 2.4 2.7 2.7 2.7 2.4

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

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Total U.S. Consumption 91.1 101.0 100.5 110.7 108.4

Total U.S. Demand 111.0 121.2 120.7 131.8 123.7

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

Week ended Week ended Week ended Week ended Week ended

Jan 13 Jan 6 Dec 30 Dec 23 Dec 16

Wind 8 12 11 9 12

Solar 2 2 2 2 2

Hydro 7 7 6 6 6

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 40 36 35 37 37

Coal 19 18 23 24 20

Nuclear 22 23 19 19 20

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

Hub Current Day Prior Day

Henry Hub 3.43 3.78

Transco Z6 New York 3.49 3.23

PG&E Citygate 16.41 16.58

Dominion South 2.66 2.78

Chicago Citygate 3.26 3.40

Algonquin Citygate 4.56 4.43

SoCal Citygate 19.50 18.65

Waha Hub 1.73 1.76

AECO 2.91 3.03

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

Hub Current Day Prior Day

New England 46.50 45.75

PJM West 43.25 43.50

Ercot North 36.00 24.00

Mid C 157.33 55.50

Palo Verde 88.75 102.50

SP-5 149.25 155.00

(Reporting by Scott DiSavino; Editing by Andrea Ricci)

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