US natgas prices climb 2% as producers cut output for Hurricane Francine
U.S. natural gas futures rose about 2% as producers cut output ahead of Hurricane Francine, settling at $2.270 per million British thermal units. Despite the increase, demand is expected to drop due to power outages and reduced flows to LNG export plants. Gas output in the Lower 48 states fell to an average of 102.1 bcfd in September, with forecasts indicating a further decline. The hurricane's impact is anticipated to lower gas prices, contrasting with historical trends where Gulf Coast hurricanes typically caused price spikes.
By Scott DiSavino
Sept 11 (Reuters) - U.S. natural gas futures climbed about 2% on Wednesday as oil and gas producers continued to cut output before Hurricane Francine slams into the Louisiana coast later in the day.
Front-month gas futures (NGc1) for October delivery on the New York Mercantile Exchange rose 3.8 cents, or 1.7%, to settle at $2.270 per million British thermal units (mmBtu).
Prices rose even though Francine was expected to cut gas demand by curtailing flows to Gulf Coast liquefied natural gas (LNG) export plants and by causing homes and businesses to lose power. Louisiana is home to three of the nation’s seven big operating LNG export plants.
Because over 75% of U.S. gas production comes from big inland shale basins like Appalachia in Pennsylvania, West Virginia and Ohio and the Permian in West Texas and eastern New Mexico, analysts said hurricanes were more likely to reduce gas prices by cutting demand through power outages and knocking LNG export plants out of service.
That is different from 20 years ago when roughly 20% of the nation’s gas came from the federal offshore Gulf of Mexico. Back then Gulf Coast hurricanes usually caused gas prices to spike higher, but now that offshore region produces only about 2% of the country’s gas.
In the spot market, pipeline constraints caused next-day gas prices at the Waha hub (NG-WAH-WTX-SNL) in the Permian Shale in West Texas to fall to an all-time low and average in negative territory for a record 35th time this year.
Waha prices first averaged below zero in 2019. It happened 17 times in 2019, six times in 2020 and once in 2023.
SUPPLY AND DEMAND
Financial firm LSEG said gas output in the Lower 48 U.S. states slid to an average of 102.1 billion cubic feet per day (bcfd) so far in September, down from 103.2 bcfd in August.
On a daily basis, output was on track to drop by 2.7 bcfd over the past two days to a preliminary three-month week low of 100.0 bcfd on Wednesday as energy firms shut some Gulf Coast production ahead of Francine.
Meteorologists forecast weather across the U.S. would remain mostly warmer than normal through Sept. 26. Analysts noted that warm weather in mid-September still feels pretty mild and should not result in much gas demand for heating or cooling.
LSEG forecast average gas demand in the Lower 48, including exports, will rise from 99.4 bcfd this week to 99.8 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Tuesday.
Gas flows to the seven big U.S. LNG export plants rose to an average of 13.1 bcfd so far in September, up from 12.9 bcfd in August. That compares with a monthly record high of 14.7 bcfd in December 2023.
On a daily basis, however, total LNG feedgas was on track to decline to a two-week low of 11.7 bcfd on Wednesday as flows to the 2.0-bcfd Cameron LNG export plant in Louisiana fell from 1.9 bcfd on Tuesday to 0.9 bcfd on Wednesday, according to LSEG data. The U.S. National Hurricane Center (NHC) forecast Francine would hit near Cameron.
Looking ahead, Berkshire Hathaway Energy’s 0.8-bcfd Cove Point LNG export plant in Maryland will likely be shut for about three weeks of routine annual maintenance around Sept. 20, according to the plant’s history and notices to customers.
Week ended Week ended Year ago Five-year
Sep 6 Aug 30 Sep 6 average
Forecast Actual Sep 6
U.S. weekly natgas storage change (bcf): +48 +13 +50 +67
U.S. total natgas in storage (bcf): 3,395 3,347 3,189 3,091
U.S. total storage versus 5-year average 9.8% 10.7%
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 (NGc1) 2.22 2.23 2.70 2.66 3.60
Title Transfer Facility (TTF) (TRNLTTFMc1) 11.52 11.47 11.44 13.04 14.39
Japan Korea Marker (JKM) (JKMc1) 13.79 13.78 13.92 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 14 15 16 25 38
U.S. GFS CDDs 148 147 127 132 111
U.S. GFS TDDs 162 162 143 157 149
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 102.7 102.0 102.4 103.5 96.5
U.S. Imports from Canada 8.2 7.8 7.6 N/A 7.1
U.S. LNG Imports 0.0 0.0 0.0 0.0 0.0
Total U.S. Supply 110.9 109.8 109.9 N/A 103.6
U.S. Demand (bcfd)
U.S. Exports to Canada 1.9 1.9 1.9 N/A 2.3
U.S. Exports to Mexico 7.3 7.2 7.2 N/A 6.0
U.S. LNG Exports 13.1 12.9 12.3 12.1 8.2
U.S. Commercial 4.5 4.8 4.8 4.7 4.9
U.S. Residential 3.6 4.1 4.2 3.8 3.9
U.S. Power Plant 43.2 39.3 40.3 42.1 36.0
U.S. Industrial 21.8 21.9 21.9 21.5 21.7
U.S. Plant Fuel 5.1 5.0 5.1 5.1 5.1
U.S. Pipe Distribution 2.1 2.1 2.1 2.1 2.2
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 80.5 77.4 78.4 79.4 80.0
Total U.S. Demand 102.9 99.4 99.8 N/A 90.4
N/A is Not Available
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 74 75 83 107 81
Jan-Jul 76 76 77 102 79
Oct-Sep 78 78 76 103 81
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended 2023 2022 2021
Sep 13 Sep 6
Wind 8 6 10 11 10
Solar 6 5 4 3 3
Hydro 5 5 6 6 7
Other 1 1 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 45 48 41 38 37
Coal 15 16 17 21 23
Nuclear 19 18 19 19 20
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub (NG-W-HH-SNL) 2.13 2.03
Transco Z6 New York (NG-CG-NY-SNL) 1.58 1.48
PG&E Citygate (NG-CG-PGE-SNL) 2.50 2.55
Eastern Gas (old Dominion South) (NG-PCN-APP-SNL) 1.61 1.47
Chicago Citygate (NG-CG-CH-SNL) 1.79 1.80
Algonquin Citygate (NG-CG-BS-SNL) 1.90 1.95
SoCal Citygate (NG-SCL-CGT-SNL) 1.96 1.95
Waha Hub (NG-WAH-WTX-SNL) -1.25 -0.23
AECO (NG-ASH-ALB-SNL) 0.48 0.52
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England (EL-PK-NPMS-SNL) 35.00 33.50
PJM West (EL-PK-PJMW-SNL) 48.00 38.50
Ercot North (EL-PK-ERTN-SNL) 28.50 24.25
Mid C (EL-PK-MIDC-SNL) 39.75 43.00
Palo Verde (EL-PK-PLVD-SNL) 22.50 36.50