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US natgas prices drop 5% on mild weather forecasts, big storage injection

, Reuters - 2:54 PM ET 10/31/2024 default

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Mild weather should keep heating demand lower than usual

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EIA reports gas storage build above five-year average

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Analysts project average gas output to decline in 2024

(Adds latest prices)
By Scott DiSavino
Oct 31 (Reuters) - U.S. natural gas futures dropped about 5% on Thursday due to an expected bigger-than-usual
storage build and forecasts for mild weather to continue through mid-November.
That mild weather should keep heating demand lower than usual for this time of year and allow utilities to keep
adding more gas into storage than normal for at least a few more weeks.
The U.S. Energy Information Administration (EIA) said utilities added 78 billion cubic feet (bcf) of gas into storage
during the week ended Oct. 25.
That was a little less than the 82-bcf build analysts forecast in a Reuters poll and compared with an increase of 77
bcf in the same week last year and a five-year (2019-2023) average rise of 67 bcf for this time of year.

It was the first time utilities added more gas into storage than usual for two weeks in a row since October 2023.
Those injections boosted stockpiles to about 5% above the five-year average.
Prior to last week, storage injections had been smaller than usual for 14 consecutive weeks because many producers
reduced drilling activities this year after average spot monthly prices at the U.S. Henry Hub benchmark in
Louisiana fell to a 32-year low in March. Prices have remained relatively low since then.
Front-month gas futures for December delivery on the New York Mercantile Exchange fell 13.8 cents, or 4.9%, to
settle at $2.707 per million British thermal units (mmBtu). On Wednesday, the contract closed at its highest price since
Oct. 4.
For the month, the front-month was down about 7% after soaring 37% in September.

SUPPLY AND DEMAND
Financial group LSEG said average gas output in the Lower 48 U.S. states eased to 101.7 billion cubic feet per day
(bcfd) so far in October, down from 101.8 bcfd in September. That compared with a record 105.5 bcfd in December 2023.
On a daily basis, however, output was on track to drop by about 2.3 bcfd over the past three days to a preliminary
two-week low of 101.0 bcfd on Thursday. Analysts noted preliminary data was often revised later in the day.
With so many firms curtailing drilling activities, analysts projected average output in calendar 2024 will decline
for the first time since 2020 when the COVID pandemic cut demand for the fuel.
Looking ahead, however, analysts projected producers would boost output later this year and in 2025 to meet rising
liquefied natural gas (LNG) export demand with two new export plants - Venture Global LNG's Plaquemines in Louisiana and
Cheniere Energy's Corpus Christi stage 3 expansion in Texas - expected to start producing LNG later this year.
Meteorologists projected the weather in the Lower 48 states would remain warmer than normal through at least Nov. 15.
But even warmer-than-normal weather in early November is cooler than warmer-than-normal weather in late October.
So with seasonally cooler weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would
rise from 99.5 bcfd this week to 100.9 bcfd next week. The forecast for next week was lower than LSEG's outlook on
Wednesday.
The amount of gas flowing to the seven big U.S. LNG export plants rose to an average of 13.1 bcfd so far in October,
up from 12.7 bcfd in September. That compares with a monthly record high of 14.7 bcfd in December 2023.

Week ended Week ended Year ago Five-year
Oct 25 Oct 18 Oct 25 average
Actual Actual Oct 25
U.S. weekly natgas storage change (bcf): +78 +80 +77 +67
U.S. total natgas in storage (bcf): 3,863 3,785 3,756 3,685
U.S. total storage versus 5-year average 4.8% 4.6%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year
Last Year Average Average
2023 (2018-2022)
Henry Hub 2.82 2.85 3.15 2.66 3.60
Title Transfer Facility (TTF) 12.69 13.11 14.55 13.04 14.39
Japan Korea Marker (JKM) 13.52 13.69 16.30 14.39 14.31

LSEG 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 161 170 207 212 238
U.S. GFS CDDs 30 31 26 23 17
U.S. GFS TDDs 191 201 133 235 255

LSEG U.S. Weekly GFS Supply and Demand Forecasts
Prior Week Current Next Week This Week Five-Year
Week Last Year (2019-2023)
Average For
Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production 101.7 102.5 102.7 104.1 96.8
U.S. Imports from Canada 7.8 8.2 7.5 N/A 7.1
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0
Total U.S. Supply 109.5 110.6 110.2 N/A 103.9

U.S. Demand (bcfd)
U.S. Exports to Canada 2.2 2.3 2.3 N/A 2.3
U.S. Exports to Mexico 5.6 6.4 6.3 N/A 5.9
U.S. LNG Exports 13.0 13.3 13.6 14.2 10.0
U.S. Commercial 6.4 7.2 8.0 10.3 6.9
U.S. Residential 7.0 8.7 10.5 14.8 7.3
U.S. Power Plant 31.5 31.8 30.1 31.0 30.9
U.S. Industrial 22.3 22.5 22.8 23.9 22.3
U.S. Plant Fuel 5.0 5.1 5.1 5.1 5.0
U.S. Pipe Distribution 2.0 2.1 2.1 2.1 2.0
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 74.3 77.5 78.7 87.3 74.5
Total U.S. Demand 95.2 99.5 100.9 N/A 92.7

N/A is Not Available

U.S. Northwest River Forecast Center (NWRFC) at The 2025 Current 2025 Prior 2024 2003 2022
Dalles Dam Day % of Day % of % of Normal % of Normal % of Normal
Normal Normal Actual Actual Actual
Forecast Forecast
Apr-Sep 90 91 74 83 107
Jan-Jul 87 87 76 77 102
Oct-Sep 89 89 77 76 103

U.S. weekly power generation percent by fuel - EIA
Week ended Week ended 2023 2022 2021
Nov 1 Oct 25
Wind 16 14 10 11 10
Solar 5 6 4 3 3
Hydro 4 5 6 6 7
Other 1 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 41 42 41 38 37
Coal 14 14 17 21 23
Nuclear 19 18 19 19 20

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 2.03 1.82
Transco Z6 New York 1.85 1.36
PG&E Citygate 4.40 2.44
Eastern Gas (old Dominion South) 1.66 1.29
Chicago Citygate 1.88 1.43
Algonquin Citygate 1.88 1.47
SoCal Citygate 2.65 1.61
Waha Hub -0.89 0.17
AECO 0.68 0.44

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 48.50 28.50
PJM West 35.50 35.00
Ercot North 22.25 14.50
Mid C 37.75 38.75
Palo Verde 5.75 23.50
SP-15 23.00 18.75

(Reporting by Scott DiSavino; Editing by Kirsten Donovan, Paul Simao and Diane Craft)

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