SOUTHWESTERN ENERGY COMPANY
By Scott DiSavino
May 2 (Reuters) - U.S. natural gas futures jumped about 5% on Thursday on a continued drop in output and forecasts for
more demand next week than previously expected due to an increase in the amount of gas flowing to liquefied natural gas (LNG)
export plants.
The price rise came even though last week's storage build was slightly bigger than analysts expected.
The U.S. Energy Information Administration (EIA) said utilities added 59 billion cubic feet (bcf) of gas into storage
during the week ended April 26.
That was more than the 55-bcf build analysts forecast in a Reuters poll and compares with an increase of 62 bcf in the same
week last year and a five-year (2019-2023) average rise of 72 bcf for this time of year.
That leaves gas stockpiles about 35% above normal levels for this time of year.
U.S. gas production has dropped by around 10% so far in 2024 after several energy firms, including EQT and Chesapeake
Energy, delayed well completions and cut back on other drilling activities after prices fell to 3-1/2-year lows in
February and March.
EQT is currently the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with
Southwestern Energy.
Front-month gas futures for June delivery on the New York Mercantile Exchange rose 9.4 cents, or 4.9%, to $2.026 per
million British thermal units (mmBtu) at 10:44 a.m. EDT (1444 GMT).
A lack of rapid price moves in recent weeks has cut the front-month's 30-day implied volatility to 51.6%, its
lowest level since March 2022.
The market uses implied volatility to estimate likely price changes in the future. At-the-money 30-day implied volatility, a
determinant of an option's premium, has averaged 60.0% so far in 2024, down from 70.3% in 2023 and a five-year (2019-2023) average
of 60.1%.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 95.7 billion cubic feet per day (bcfd)
so far in May, down from 98.1 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023.
On a daily basis, output was on track to drop by 2.1 bcfd over the past eight days to a preliminary 15-week low of 95.6 bcfd
on Thursday.
Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through May 10 before
turning to near-normal levels in the May 11-17 period.
LSEG forecast gas demand in the Lower 48, including exports, would rise from 91.6 bcfd this week to 92.5 bcfd next week. The
forecast for next week was higher than LSEG's outlook on Wednesday.
Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.2 bcfd so far in May with
the slow return to service of Freeport LNG's plant in Texas. That compares with a monthly record of 14.7 bcfd in December.
The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global
prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine.
Gas was trading around $10 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the
Japan Korea Marker (JKM) benchmark in Asia.
Week ended Week ended Year ago Five-year
Apr 26 Apr 19 Apr 26 average
Actual Actual Apr 26
U.S. weekly natgas storage change (bcf): +59 +92 +62 +72
U.S. total natgas in storage (bcf): 2,484 2,425 2,048 1,842
U.S. total storage versus 5-year average 34.9% 37.0%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year
Last Year Average Average
2023 (2018-2022)
Henry Hub 1.96 1.93 2.30 2.66 3.60
Title Transfer Facility (TTF) 9.39 8.99 9.97 13.04 14.39
Japan Korea Marker (JKM) 10.24 10.34 10.45 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 59 56 89 96 83
U.S. GFS CDDs 80 80 59 59 66
U.S. GFS TDDs 139 136 148 155 149
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 97.0 96.6 96.6 103.1 94.4
U.S. Imports from Canada 7.1 7.1 6.3 8.2 7.5
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0
Total U.S. Supply 104.1 103.7 102.9 111.3 101.9
U.S. Demand (bcfd)
U.S. Exports to Canada 2.1 2.1 1.8 2.1 2.4
U.S. Exports to Mexico 6.8 5.9 6.3 6.1 5.6
U.S. LNG Exports 11.7 12.3 12.1 13.4 8.8
U.S. Commercial 7.8 5.9 5.6 7.2 5.8
U.S. Residential 10.1 6.3 5.8 9.2 6.9
U.S. Power Plant 28.6 30.6 32.4 29.1 28.4
U.S. Industrial 23.3 21.8 21.7 22.0 21.5
U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.8
U.S. Pipe Distribution 2.0 1.9 1.9 1.9 1.9
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 76.9 71.3 72.3 74.3 69.4
Total U.S. Demand 97.4 91.6 92.5 95.9 86.2
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021
% of Normal % of Normal % of Normal % of Normal % of Normal
Forecast Forecast Actual Actual Actual
Apr-Sep 80 79 83 107 81
Jan-Jul 81 80 77 102 79
Oct-Sep 82 81 76 103 81
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
May 3 Apr 26 Apr 19 Apr 12 Apr 5
Wind 15 16 16 16 15
Solar 6 6 6 6 5
Hydro 7 7 7 7 7
Other 2 1 2 1 1
Petroleum 0 0 0 0 0
Natural Gas 39 37 37 37 38
Coal 13 13 13 13 13
Nuclear 19 19 19 20 20
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 1.63 1.68
Transco Z6 New York 1.40 1.48
PG&E Citygate 2.23 2.24
Eastern Gas (old Dominion South) 1.37 1.43
Chicago Citygate 1.41 1.47
Algonquin Citygate 1.40 1.71
SoCal Citygate 1.47 1.51
Waha Hub 0.58 0.11
AECO 0.97 0.91
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 25.25 29.00
PJM West 41.75 33.50
Ercot North 82.00 15.75
Mid C 59.50 57.00
Palo Verde 3.00 2.25
SP-15 9.25 2.25
(Reporting by Scott DiSavino; Editing by Paul Simao)
US natgas prices jump 5% on higher demand forecast, lower output
May 02, 2024 at 10:42 am EDT
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