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U.S. natgas futures jump 6% on colder forecasts for late December

U.S. natural gas futures jumped 6% to a one-week high on Friday on forecasts for much colder weather and higher heating demand through late December than previously expected.

In the spot market, U.S. prices have more than doubled over the past couple of weeks - with gas hitting multi-year highs - as freezing weather and snow blankets parts of California and gas pipeline outages and constraints limit flows of the fuel from Texas.

That colder weather should force utilities to pull more gas from storage in coming weeks. Gas stockpiles were about 1.6% below the five-year (2017-2021) average for this time of year.

Some analysts do not expect Freeport to return until January, February or later because it will likely take federal pipeline safety regulators longer than Freeport expects to review and approve the plant's restart plan once the company submits it.

Two other vessels - Prism Diversity and Prism Courage - however, have continued to wait in the Gulf of Mexico since at least early November to pick up LNG from Freeport.

Front-month gas futures NG1! for January delivery on the New York Mercantile Exchange rose 34.4 cents, or 5.8%, to $6.306 per million British thermal units (mmBtu) at 10:30 a.m. EST (1530 GMT), putting the contract on track for its highest close since Nov. 1.

For the week, the front-month was up about 1% after falling about 11% last week.

U.S. gas futures were up about 69% so far this year as much higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's war in Ukraine.

Gas was trading at $44 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe (TRNLTTFMc1) and $34 at the Japan Korea Marker (JKM) in Asia (JKMc1).

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U.S. gas futures lag global prices because the United States is the world's top producer with all the fuel it needs for domestic use, while capacity constraints and the Freeport outage have prevented the country from exporting more LNG.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.7 bcfd so far in December, up from a monthly record of 99.5 bcfd in November.

With colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise from 117.8 bcfd this week to 123.1 bcfd next week and 142.0 bcfd in two weeks. The forecasts for next week was higher than Refinitiv's outlook on Thursday.

The average amount of gas flowing to U.S. LNG export plants rose to 11.9 bcfd so far in December, up from 11.8 bcfd in November. That remains below the monthly record of 12.9 bcfd in March due to the Freeport outage.

Week ended Dec 9 (Forecast)

Week ended

Dec 2 (Actual)

Year ago Dec 9

Five-year average Dec 9

U.S. weekly natgas storage change (bcf):

-42

-21

-83

-93

U.S. total natgas in storage (bcf):

3,420

3,462

3,430

3,427

U.S. total storage versus 5-year average

-0.2%

-1.6%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2021

Five Year Average (2017-2021)

Henry Hub NG1!

5.94

5.96

3.86

3.73

2.89

Title Transfer Facility (TTF) (TRNLTTFMc1)

41.77

42.67

37.67

16.04

7.49

Japan Korea Marker (JKM) (JKMc1)

34.30

33.35

37.84

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 Norm

30-Year Norm

U.S. GFS HDDs

434

401

317

370

401

U.S. GFS CDDs

6

9

15

5

4

U.S. GFS TDDs

440

410

332

375

405

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

100.1

99.7

99.9

95.7

89.8

U.S. Imports from Canada

8.5

8.2

9.1

9.4

8.9

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.3

Total U.S. Supply

108.6

107.9

109.0

105.1

99.0

U.S. Demand (bcfd)

U.S. Exports to Canada

3.4

3.2

3.3

3.5

3.2

U.S. Exports to Mexico

5.6

5.4

5.5

5.7

5.0

U.S. LNG Exports

11.8

11.7

12.4

12.0

6.9

U.S. Commercial

13.6

13.5

14.8

13.9

14.6

U.S. Residential

22.1

21.7

24.5

22.1

24.6

U.S. Power Plant

27.1

30.5

30.5

29.2

27.3

U.S. Industrial

24.3

24.1

24.3

23.9

24.9

U.S. Plant Fuel

4.9

4.9

4.9

4.9

4.9

U.S. Pipe Distribution

2.5

2.6

2.7

2.6

2.5

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

94.7

97.4

101.8

96.7

98.9

Total U.S. Demand

115.7

117.8

123.1

117.9

114.0

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

Week ended Dec 9

Week ended Dec 2

Week ended Nov 25

Week ended Nov 18

Week ended Nov 11

Wind

10

15

9

9

15

Solar

2

2

2

3

3

Hydro

6

6

6

7

6

Other

2

2

2

2

3

Petroleum

0

0

0

0

0

Natural Gas

39

35

39

41

38

Coal

20

19

20

18

16

Nuclear

21

21

20

20

20

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

Hub

Current Day

Prior Day

Henry Hub (NG-W-HH-SNL)

4.79

4.49

Transco Z6 New York (NG-CG-NY-SNL)

5.05

4.40

PG&E Citygate (NG-CG-PGE-SNL)

31.84

21.12

Dominion South (NG-PCN-APP-SNL)

4.41

4.06

Chicago Citygate (NG-CG-CH-SNL)

4.69

4.31

Algonquin Citygate (NG-CG-BS-SNL)

6.47

4.85

SoCal Citygate (NG-SCL-CGT-SNL)

31.00

22.29

Waha Hub (NG-WAH-WTX-SNL)

1.45

0.88

AECO (NG-ASH-ALB-SNL)

3.94

3.78

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

Hub

Current Day

Prior Day

New England (EL-PK-NPMS-SNL)

55.75

49.25

PJM West (EL-PK-PJMW-SNL)

60.50

58.50

Ercot North (EL-PK-ERTN-SNL)

43.50

46.75

Mid C (EL-PK-MIDC-SNL)

268.00

155.75

Palo Verde (EL-PK-PLVD-SNL)

280.00

172.75

SP-15 (EL-PK-SP15-SNL)

260.75

183.75

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