US natgas gains as focus returns to strong demand
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U.S. natural gas futures rallied on Wednesday as attention returned to
growing demand amid heat waves, stabilizing after a 17% drop in the last session on bets that extended
Shutting down the Freeport LNG export hub would increase domestic stocks.
First-month gas futures rose about 23 cents or 3.2% to settle at $7.420 per million British thermal
units. Prices settled down 17% on Tuesday, recording their lowest close since May 9.
Goldman Sachs raised its Henry Hub summer price forecast to $7.15 per MMBtu from $6.80 previously,
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the reasoning that higher US inventories due to the Freeport outage would be offset by warmer temperatures and
power and residential demand stronger than expected.
News that Freeport’s restart could take 90 days instead of the original estimate of three weeks following a
Last week’s explosion also heightened concerns about gas shortages in Europe and pushed up prices in the region.
Freeport, the second largest LNG export facility in the United States, consumes approximately 2 billion cubic feet per day (bcfd) of
gas, so a 90-day shutdown would translate to approximately 180 billion cubic feet (bcf) of additional gas available for the
American market.
Storage in the United States is currently about 15%, or 340 billion cubic feet, below normal levels for this time of year, its lowest.
since April 2019.
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« The market has moved past the Freeport episode unless news develops again. The additional gas released
for domestic consumption could only do so much for the price and the market is looking forward to the
future,” said Zhen Zhu, management consultant at CH Guernsey and Co in Oklahoma City.
“But while demand is fundamentally high, production and expected production increases provide some
sanity check,” Zhu added.
Electricity demand in Texas did not hit a new record on Monday due to cooler weather, but will likely be
break peak usage records later this week as homes and businesses keep air conditioners running to escape a
persistent heat wave.
Low wind power is forcing generators, including those in Texas – the windiest state – to burn
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more gas to keep the lights on.
U.S. gas futures were still up around 103% this year as much higher prices in Europe and Asia keep demand going
for strong US LNG exports, especially since Russia’s February 24 invasion of Ukraine fueled fears that Moscow could
cut off the gas supply to Europe.
The seven major US export plants can transform about 13.6 billion cubic feet per day of gas into LNG.
“We will likely see consolidation the rest of the week,” said Christin Kelley, senior commodities analyst.
at Schneider Electric, also attributing the rebound to some investors covering their shorts.
Weekend Weekend One year ago Five years
June 10 June 3 June 10 average
(Forecast) (Actual) June 10
US Nat Gas Storage Weekly Change (bcf): +90 +97 +28 +79
Total nat gas in storage in the United States (bcf): 2,089 1,999 2,425 2,418
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Total US storage vs. 5-year average -13.6% -14.5%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Previous Day This Month Previous Year Five Years
Average last year Average
2021 (2017-2021)
Henry Hub 7.40 7.18 3.27 3.73 2.89
Securities Transfer Facility (TTF) 34.98 26.92 10.27 16.04 7.49
Japan Korea marker (JKM) 23.18 23.04 11.58 18.00 8.95
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
Total two-week forecast Current day Previous day Previous year 10 years 30 years
Standard Standard
US GFS hard drives 8 7 5 10 11
US DC GFS 208 200 183 168 166
United States GFS TDD 207 188 178 177
Refinitiv’s Weekly US GFS Supply and Demand Forecast
Previous week Current week Next week This week Five years
Last year’s average for
Month
US Supply (bcfd)
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Lower 48 US dry production 94.9 94.9 93.9 92.0 84.6
US imports from Canada 7.9 8.1 7.6 7.8 7.7
US LNG imports 0.0 0.0 0.0 0.0 0.1
Total US supply 102.8 103.0 102.8 99.8 92.4
US demand (bcfd)
US exports to Canada 2.6 2.2 2.2 2.1 2.2
US exports to Mexico 6.0 6.1 6.1 5.3 5.1
US LNG exports 12.3 10.7 11.3 9.6 4.3
Commercial in the United States 4.6 4.5 4.4 4.4 4.7
US residential 3.9 3.7 3.7 3.5 4.3
US power plant 33.2 39.3 38.4 36.3 32.8
US industry 20.7 20.9 20.9 20.7 20.9
US vegetable fuel 4.7 4.7 4.7 4.7 4.7
Distribution of pipes in the United States 1.8 2.0 2.0 1.9 1.8
Fuel for US vehicles 0.1 0.1 0.1 0.1 0.1
Total US consumption 69.0 75.2 74.3 71.6 69.3
Total US demand 89.9 94.2 93.9 88.6 80.9
Percentage of US Weekly Electricity Generation by Fuel – EIA
Weekend Weekend Weekend Weekend Weekend
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June 17 June 10 June 3 May 27 May 20
Wind 9 8 12 12 12
Solar 5 5 4 4 4
Hydropower 5 7 7 7 7
Other 2 2 2 2 2
Oil 0 0 0 0 0
Natural gas 41 41 36 37 37
Coal 20 20 19 20 20
Nuclear 19 19 19 19 19
SNL Next Day US Natural Gas Price ($ per mmBtu)
Hub Current day Previous day
Henry Hub
Transco Z6 New York
PG&E City Gate
Dominion South
Chicago city gate
Algonquin City Gate
SoCal City Gate
Waha Center
AECO
SNL US Power Next-Day price ($ per megawatt-hour)
Hub Current day
New England
PJM West
Ercot North
Middle C
Palo Green
SP-15
(Reporting by Arpan Varghese and Eileen Soreng in Bengaluru; Editing by Will Dunham
Editing by Nick Zieminski)
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