U.S. natgas futures down about 9% to 11-week low on big storage build


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U.S. natural gas futures dropped about 9% to an 11-week low on Thursday on a

bigger-than-expected storage build, as the extended shutdown of the Freeport liquefied natural gas (LNG)

export plant in Texas allows utilities to quickly rebuild low gas stockpiles.

Even though the storage build was bigger than expected, it was still smaller than usual for this time of

year as extreme heat in several parts of the country last week boosted the amount of gas power generators

burned to keep air conditioners humming.

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That was especially the case in Texas and the U.S. Southeast where power demand hit record levels this

week.

The U.S. Energy Information Administration (EIA) said utilities added 74 billion cubic feet (bcf) of gas

to storage during the week ended June 17.

That was more than the 65-bcf build analysts forecast in a Reuters poll and compares with an increase of

49 bcf in the same week last year and a five-year (2017-2021) average increase of 82 bcf.

Last week’s increase boosted stockpiles to 2.169 trillion cubic feet (tcf), or 13.2% below the five-year

average of 2.500 tcf for this time of the year.

The Freeport shutdown on June 8 reduced the amount of U.S. gas available to the rest of the world,

especially in Europe where most U.S. LNG has gone as countries there wean themselves off Russian energy after

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Moscow invaded Ukraine in February.

Analysts said leaving more gas in the United States, however, should give American utilities a chance to

rebuild extremely low stockpiles quickly. Freeport, the second-biggest U.S. LNG export plant, consumes about 2

billion cubic feet per day (bcfd) of gas, so a 90-day shutdown would make about 180 billion cubic feet (bcf)

of additional gas available to the U.S. market.

Front-month gas futures for July delivery on the New York Mercantile Exchange (NYMEX) were down

62.7 cents, or 9.1%, to $6.231 per million British thermal units (mmBtu) at 10:47 a.m. EDT (1447 GMT), putting

the contract on track to close at its lowest level since April 6.

That kept the front-month in technically oversold territory, with a relative strength index (RSI) below 30

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for a fourth straight day for the first time since September 2020.

With the Federal Reserve expected to keep raising interest rates, open interest in NYMEX futures

fell on Wednesday to its lowest level since August 2016 for a second day in a row as investors continued to

cut back on risky assets.

Despite recent declines, U.S. gas futures are still up about 68% so far this year as much higher prices in

Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia’s Feb. 24 invasion of Ukraine

stoked fears Moscow might cut gas supplies to Europe.

Gas was trading around $41 per mmBtu in Europe and $37 in Asia. Gas prices at the

Title Transfer Facility (TTF) in the Netherlands, the European benchmark, were up 6% after Germany entered

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Phase 2 of its three-stage emergency gas plan due to reduced supply from Russia.

Russia kept pipeline exports to Europe low at 3.7 bcfd on Wednesday, the same as on Tuesday, on the three

mainlines into Germany: North Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the

Russia-Ukraine-Slovakia-Czech Republic-Germany route. That compares with an average of 11.6 bcfd in June 2021.

Data provider Refinitiv said the amount of gas flowing to U.S. LNG export plants has fallen from an

average of 12.5 bcfd in May to 11.3 bcfd so far in June due to the Freeport outage. That compares with a

monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.6 bcfd of gas into

LNG.

Week ended Week ended Year ago Five-year

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Jun 17 Jun 10 Jun 17 average

(Actual) (Actual) Jun 17

U.S. weekly natgas storage change (bcf): +74 +92 +49 +82

U.S. total natgas in storage (bcf): 2,169 2,095 2,474 2,500

U.S. total storage versus 5-year average -13.2% -13.4%

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

Last Year Average Average

2021 (2017-2021)

Henry Hub 6.72 6.86 3.27 3.73 2.89

Title Transfer Facility (TTF) 41.38 39.11 10.27 16.04 7.49

Japan Korea Marker (JKM) 37.11 37.33 11.58 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 30-Year

Norm Norm

U.S. GFS HDDs 2 2 5 6 7

U.S. GFS CDDs 222 224 190 184 182

U.S. GFS TDDs 224 226 195 190 189

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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 94.9 95.0 95.5 92.5 84.6

U.S. Imports from Canada 8.2 7.7 7.9 7.6 7.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 103.1 102.8 103.4 100.1 92.4

U.S. Demand (bcfd)

U.S. Exports to Canada 2.2 2.3 2.3 2.4 2.2

U.S. Exports to Mexico 6.2 6.0 6.1 6.9 5.1

U.S. LNG Exports 10.7 10.7 11.4 10.5 4.3

U.S. Commercial 4.5 4.4 4.4 4.4 4.7

U.S. Residential 3.7 3.7 3.5 3.6 4.3

U.S. Power Plant 37.5 37.9 40.0 33.4 32.8

U.S. Industrial 20.9 21.0 21.1 20.7 20.9

U.S. Plant Fuel 4.7 4.7 4.7 4.7 4.7

U.S. Pipe Distribution 2.0 2.0 2.0 2.0 1.8

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

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Total U.S. Consumption 73.4 73.8 75.8 68.9 69.3

Total U.S. Demand 92.5 92.8 95.6 88.7 80.9

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

Week ended Week ended Week ended Week ended Week ended

Jun 24 Jun 17 Jun 10 Jun 3 May 27

Wind 12 8 12 12

Solar 3 5 4 4

Hydro 7 7 7 7

Other 2 2 2 2

Petroleum 0 0 0 0

Natural Gas 38 41 36 37

Coal 20 20 19 20

Nuclear 17 19 19 19

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

Hub Current Day Prior Day

Henry Hub 6.76 6.60

Transco Z6 New York 5.90 5.75

PG&E Citygate 8.02 7.94

Dominion South 5.71 5.73

Chicago Citygate 6.48 6.46

Algonquin Citygate 5.95 6.12

SoCal Citygate 7.70 6.66

Waha Hub 6.09 5.92

AECO 5.21 5.27

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

Hub Current Day

New England 59.00 60.00

PJM West 88.25 130.25

Ercot North 224.00 142.50

Mid C 25.75 23.50

Palo Verde 70.75 77.50

SP-15 80.75 78.25

(Reporting by Scott DiSavino

Editing by Nick Zieminski and Paul Simao)

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