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U.S. natgas futures drop to 4-1/2 month low on warmer-than-usual December outlook

Kitco News

Dec 6 (Reuters) - U.S. natural gas futures shed over 11% on Monday to the lowest in more than 4-1/2 months, as forecasts for mild December temperatures soured the demand outlook.

Front-month gas futures dropped 47.5 cents, or 11.5%, to settle at $3.657 per million British thermal units (mmBtu), their lowest close since July 15.

"We're seeing a lot warmer than normal weather in the forecast here, and it looks like it might be sticking around towards the third week in December, which is not sending any bullish signals to the traders," Robert DiDona of Energy Ventures Analysis said.

Since Nov. 26, the front month has dropped over 30% in six sessions and has lost about $1.8 per mmBtu, in stark contrast to the seven-year high of nearly $6.5 per mmBtu hit two months ago.

A lot of risk premium relating to a supply shortfall has been taken out of the market, DiDona added. read more

Global gas prices have hit record highs in recent months as utilities around the world scrambled for LNG cargoes to replenish low stocks in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China.

Tracking the global rally, U.S. futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter.

"Some lower price levels would appear to lie ahead that could carry January futures to the $3.40-3.50 zone as a minimum if the (weather) forecasts stay mild this week." advisory firm Ritterbusch and Associates said in a note.

Data provider Refinitiv said output in the U.S. Lower 48 states has averaged 96.4 billion cubic feet per day (bcfd) so far in December, down slightly from a monthly record of 96.5 bcfd in November.

Refinitiv projected average U.S. gas demand, including exports, would rise from 112.1 bcfd last week to 115.4 bcfd this week, but estimated a drop to 112.6 bcfd next week.

Week ended Dec 3 (Forecast)
Week ended Nov 26 (Actual)
Year ago Dec 3
Five-year average Dec 3
U.S. weekly natgas storage change (bcf):
-49
-59
-78
-55
U.S. total natgas in storage (bcf):
3,515
3,564
3,861
3,595
U.S. total storage versus 5-year average
-2.2%
-2.4%
Global Gas Benchmark Futures ($ per mmBtu)
Current Day
Prior Day
This Month Last Year
Prior Year Average 2020
Five Year Average (2016-2020)
Henry Hub
3.83
4.22
2.58
2.13
2.66
Title Transfer Facility (TTF)
29.29
30.31
5.82
3.24
5.19
Japan Korea Marker (JKM)
34.19
35.32
9.46
4.22
6.49
Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days
Two-Week Total Forecast
Current Day
Prior Day
Prior Year
10-Year Norm
30-Year Norm
U.S. GFS HDDs
351
339
381
395
391
U.S. GFS CDDs
7
9
2
5
5
U.S. GFS TDDs
358
348
383
400
396
Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
Prior Week
Current Week
Next Week
This Week Last Year
Five-Year Average For Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production
97.2
96.6
96.8
91.2
84.7
U.S. Imports from Canada
8.8
8.8
8.9
9.2
8.9
U.S. LNG Imports
0.0
0.0
0.0
0.2
0.3
Total U.S. Supply
105.9
105.4
105.7
100.6
93.9
U.S. Demand (bcfd)
U.S. Exports to Canada
3.4
3.8
3.7
2.8
3.0
U.S. Exports to Mexico
5.7
5.6
5.5
5.7
4.6
U.S. LNG Exports
11.8
12.3
12.2
11.4
5.0
U.S. Commercial
13.1
14.0
13.5
14.1
15.0
U.S. Residential
20.5
22.3
22.6
22.7
25.4
U.S. Power Plant
26.6
26.2
24.3
28.2
25.8
U.S. Industrial
23.6
23.8
23.5
24.5
24.6
U.S. Plant Fuel
4.8
4.8
4.8
4.8
4.8
U.S. Pipe Distribution
2.4
2.5
2.4
2.5
2.4
U.S. Vehicle Fuel
0.1
0.1
0.1
0.1
0.1
Total U.S. Consumption
91.2
93.7
91.2
96.9
98.1
Total U.S. Demand
112.1
115.4
112.6
116.8
110.7
U.S. weekly power generation percent by fuel - EIA
Week ended Dec 10
Week ended Dec 3
Week ended Nov 26
Week ended Nov 19
Week ended Nov 12
Wind
10
11
13
14
14
Solar
2
2
2
2
2
Hydro
7
6
6
6
6
Other
2
2
2
2
2
Petroleum
1
1
1
1
1
Natural Gas
36
37
34
35
35
Coal
19
19
20
19
19
Nuclear
23
22
22
21
21
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub
Current Day
Prior Day
Henry Hub
3.79
4.08
Transco Z6 New York
3.57
4.00
PG&E Citygate
4.85
4.60
Dominion South
3.32
3.62
Chicago Citygate
3.86
3.89
Algonquin Citygate
4.81
7.00
SoCal Citygate
5.15
4.94
Waha Hub
3.50
3.58
AECO
3.47
3.36
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub
Current Day
Prior Day
New England
65.50
62.50
PJM West
35.75
40.00
Ercot North
39.33
37.00
Mid C
60.38
37.00
Palo Verde
29.50
33.25
SP-15
38.25
47.00
Reporting by Bharat Govind Gautam in Bengaluru and Scott DiSavino; additional reporting by Brijesh Patel; Editing by Jan Harvey and David Gregorio
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