Feb 14 (Reuters) - U.S. natural gas futures rose by more than 4% on Monday after a 10% spike in European gas prices on expectations that U.S. liquefied natural gas (LNG) exports will remain near record highs as long as there is a possibility of Russia invading Ukraine and cutting gas supplies to the rest of Europe.
U.S. prices also gained support from forecasts for more U.S. demand over the next two weeks than previously expected despite a milder than normal weather outlook for the rest of February, and as output continues to recover from cold-weather related reductions over the past month.
Gas futures in Europe TRNLTTFMc1 jumped 10% on Monday, putting prices about seven times above U.S. futures.
Front-month gas futures NGc1 for March delivery rose 18.2 cents, or 4.6%, to $4.123 per million British thermal units (mmBtu) at 10:08 a.m. EST (1508 GMT), putting the contract on track for its highest close since Feb. 8.
Gas futures traded around $27 per mmBtu in Europe TRNLTTFMc1 and $25 in Asia JKMc1 .
Since the start of the year, however, the U.S. market has focused more on changes in U.S. weather and domestic supply and demand, rather than what is happening around the world. So far in 2022, U.S. gas followed European prices about a third of the time versus two-thirds during the fourth quarter of 2021.
But, traders said, a 10% jump in European prices was hard to ignore, noting demand for U.S. LNG will remain strong so long as global gas prices trade well above U.S. futures as utilities around the world scramble for cargoes to meet surging demand in Asia and replenish low inventories in Europe.
That is even more true now with heigtened concerns Russia could invade Ukraine. If Russia invades, Europe and the United States would likely impose sanctions on Moscow, which could prompt Russia to cut gas supplies to Europe. Russia provides around 30%-40% of Europe's gas supplies, totaling about 16.3 bcfd in 2021. NG/GB
Over the weekend, there were tankers loading at all seven U.S. export plants for the first time ever after Venture Global last week got approval from federal regulators to load the first LNG cargo at its Calcasieu Pass LNG plant in Louisiana. A tanker arrived at Calcasieu on Feb. 7 and likely will take the plant's first cargo in coming days.
The amount of gas flowing to all U.S. LNG export plants rose to an average of 12.6 billion cubic feet per day (bcfd) so far in February, which would top January's monthly record of 12.4 bcfd, as liquefaction trains at Calcasieu enter service.
But no matter how high global prices rise, the United States only has capacity to turn about 12.4 billion cubic feet per day (bcfd) of gas into LNG. The rest of the fuel flowing to LNG facilities is used to run plant equipment.
Data provider Refinitiv said average output in the U.S. Lower 48 states fell from a record 97.3 bcfd in December to 94.0 bcfd in January and 92.4 bcfd so far in February as wells in several producing regions froze.
On a daily basis, however, output soared to 95.2 bcfd on Friday, its highest since Jan. 1, according to Refinitiv. Output has been rising almost daily since it dropped to 86.3 bcfd during a winter storm on Feb. 4, its lowest since February 2021.
Week ended Week ended Year ago Five-year
Feb. Feb. 4 Feb. 11 average
11(Forecast) (Actual) Feb. 11
U.S. weekly natgas storage change (bcf): -202 -222 -227 -154
U.S. total natgas in storage (bcf): 1,899 2,101 2,315 2,162
U.S. total storage versus 5-year average -12.2% -9.3%
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 NGc1 4.14 3.94 2.92 3.73 2.89
Title Transfer Facility (TTF) TRNLTTFMc1 27.24 24.77 6.14 16.04 7.49
Japan Korea Marker (JKM) JKMc1 24.57 24.80 7.36 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 353 366 454 383 380
U.S. GFS CDDs 6 5 8 8 6
U.S. GFS TDDs 359 371 462 391 386
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 91.3 94.9 95.2 76.1 83.3
U.S. Imports from Canada 9.3 9.0 9.0 10.7 8.9
U.S. LNG Imports 0.2 0.1 0.1 0.7 0.2
Total U.S. Supply 100.8 104.0 104.2 87.5 92.4
U.S. Demand (bcfd)
U.S. Exports to Canada 2.4 3.0 3.0 1.9 2.7
U.S. Exports to Mexico 5.4 5.1 5.5 4.4 4.8
U.S. LNG Exports 12.5 12.7 12.3 5.0 4.7
U.S. Commercial 17.9 16.7 14.9 22.5 15.6
U.S. Residential 30.1 27.1 24.5 39.5 26.1
U.S. Power Plant 28.2 24.2 23.7 33.8 26.3
U.S. Industrial 25.7 25.1 24.4 27.5 24.5
U.S. Plant Fuel 4.5 4.7 4.7 4.7 4.6
U.S. Pipe Distribution 2.9 2.7 2.5 2.7 3.1
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 109.4 100.6 94.7 130.8 100.3
Total U.S. Demand 129.7 121.4 115.6 142.1 112.5
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Feb 18 Feb 11 Feb 4 Jan 28 Jan 21
Wind 11 12 11 9 11
Solar 3 3 2 2 2
Hydro 7 7 6 7 7
Other 2 2 2 2 2
Petroleum 1 1 1 1 1
Natural Gas 31 33 33 35 33
Coal 23 23 25 26 25
Nuclear 22 20 19 19 19
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub NG-W-HH-SNL 4.04 4.03
Transco Z6 New York NG-CG-NY-SNL 11.64 4.46
PG&E Citygate NG-CG-PGE-SNL 4.25 4.39
Dominion South NG-PCN-APP-SNL 3.50 3.30
Chicago Citygate NG-CG-CH-SNL 3.75 3.63
Algonquin Citygate NG-CG-BS-SNL 13.75 3.93
SoCal Citygate NG-SCL-CGT-SNL 3.80 3.78
Waha Hub NG-WAH-WTX-SNL 3.40 3.40
AECO NG-ASH-ALB-SNL 2.97 3.00
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day
New England EL-PK-NPMS-SNL 40.50 45.50
PJM West EL-PK-PJMW-SNL 29.25 22.25
Ercot North EL-PK-ERTN-SNL 42.00 25.25
Mid C EL-PK-MIDC-SNL 27.75 29.25
Palo Verde EL-PK-PLVD-SNL 32.50 37.75
SP-15 EL-PK-SP15-SNL 33.00 38.75
(Reporting by Scott DiSavino; Editing by Alexander Smith)
((For Refinitiv type ENERGY in Eikon search bar and then go to the GAS dropdown and the NORTH AMERICA dropdown or see: cpurl://apps.cp./cms/?pageid=usa-gas For Interactive Map, type 'Interactive Map' in the box at upper left of the Reuters Eikon terminal. For graphics on Baker Hughes rig counts, see: For next-day SNL U.S. gas prices, see: 0#SNL-NG For next-day SNL U.S. power prices, see: 0#SNL-PWR For U.S. natgas price and storage polls, see: NGAS/POLL For U.S. nuclear power outages, see: NUKE/ For U.S. Northwest hydro power report, see: NWRFC For U.S./Canada natural gas rig count vs Henry Hub futures price, see: For the U.S. natural gas speed guide, see: USGAS For the U.S. power speed guide, see: USPOWER To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET ) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four) NYMEX Henry Hub options and futures combined 0#3CFTC023651 NYMEX Henry Hub futures only 0#1CFTC023651 ICE Henry Hub options and futures combined 0#3CFTC023391 NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C ))
