U.S. natural gas futures jumped 5% on Tuesday to a one-week high, ahead of options expiration on expectations demand will soon rise as liquefied natural gas (LNG) export plants start to exit maintenance outages.
Gas futures have been extremely volatile with prices up about 10% so far this week after plunging 23% last week to a seven-month low, as utilities boosted the amount of gas in storage ahead of winter.
Major LNG outages include Berkshire Hathaway Energy’s shutdown of its 0.8 billion cubic feet per day (bcfd) Cove Point LNG export plant in Maryland on Oct. 1 for about three weeks of planned maintenance and the shutdown of Freeport LNG’s 2.0 bcfd plant in Texas for unplanned work after an explosion on June 8. Freeport expects the facility to return to at least partial service in early to mid-November.
At least three vessels were heading to Freeport, Refinitiv data showed. Prism Brilliance was off the coast from the plant, Prism Diversity was expected to arrive Oct. 28 and Prism Courage Nov. 1. While some traders expect Freeport to delay its return to service, company officials have said the plant remains on track to return in November.
Front-month gas futures NGc1 for November delivery rose 27.3 cents, or 5.3%, to $5.472 per million British thermal units (mmBtu) at 11:26 a.m. EDT (1526 GMT), putting the contract on track for its highest close since Oct. 18. Last week, futures settled below $5 for the first time since March.
That gain pushed the contract out of technically oversold territory for the first time in seven days.
“The rapidly approaching November options expiration tomorrow and final settlement Thursday will soon overtake fundamentals in dictating near-term price moves … with a gaping November-to-December spread, continued volatility appears likely,” analysts at energy consulting firm EBW Analytics said in a report.
Futures for December, which will soon be the front-month, were trading around $6.01 per mmBtu.
With the front month down about 60% over the past nine weeks, the premiums on futures for December 2022 over November 2022 NGX22-Z22 and November 2023 over October 2023 have hit several record highs in recent days. Traders use the October-November and November-December spreads to bet on winter weather.
Despite weeks of declines, U.S. gas futures were still up about 46% this year as soaring global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s Feb. 24 invasion of Ukraine.
Gas was trading at $29 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $31 at the Japan Korea Marker (JKM) in Asia.
On Monday, European forwards fell to $27 per mmBtu, their lowest close since June 13, as mild weather and strong LNG imports allowed utilities to boost the amount of gas in storage in northwest Europe to more than 90% of capacity. That put TTF down about 70% since settling at a record $90.91 on Aug. 25. NG/EU
U.S. gas futures lag far behind global prices because the United States is the world’s top producer with all the fuel it needs for domestic use while capacity constraints and the Freeport outage prevent the country from exporting more LNG.
Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 99.5 bcfd so far in October, compared with a monthly record of 99.4 bcfd in September.
Week ended Oct 21 (Forecast)
Week ended Oct 14 (Actual)
Year ago Oct 21
Five-year average Oct 21
U.S. weekly natgas storage change (bcf):
+62
+111
+88
+66
U.S. total natgas in storage (bcf):
3,404
3,342
3,536
3,591
U.S. total storage versus 5-year average
-5.2%
-5.2%
Global Gas Benchmark Futures ($ per mmBtu)
Current Day
Prior Day
This Month Last Year
Prior Year Average 2021
Five Year Average (2017-2021)
Henry Hub NGc1
5.12
5.20
5.57
3.73
2.89
Title Transfer Facility (TTF) TRNLTTFMc1
28.58
27.49
30.84
16.04
7.49
Japan Korea Marker (JKM) JKMc1
31.29
32.47
33.22
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
159
157
192
190
203
U.S. GFS CDDs
19
19
19
28
23
U.S. GFS TDDs
178
176
211
218
226
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
98.8
99.1
99.7
95.6
87.0
U.S. Imports from Canada
7.8
7.8
8.0
8.1
7.7
U.S. LNG Imports
0.0
0.0
0.0
0.0
0.1
Total U.S. Supply
106.6
106.9
107.7
103.7
94.8
U.S. Demand (bcfd)
U.S. Exports to Canada
2.2
2.6
2.5
1.9
2.4
U.S. Exports to Mexico
5.9
5.5
5.7
6.3
5.3
U.S. LNG Exports
11.5
11.4
11.1
10.9
5.6
U.S. Commercial
8.2
7.4
8.0
7.6
6.8
U.S. Residential
10.6
9.1
10.4
9.5
7.3
U.S. Power Plant
31.1
28.5
29.6
27.3
29.0
U.S. Industrial
23.4
22.5
22.7
21.9
21.8
U.S. Plant Fuel
4.9
4.9
4.9
4.9
4.9
U.S. Pipe Distribution
2.1
2.0
2.1
2.0
1.9
U.S. Vehicle Fuel
0.1
0.1
0.1
0.1
0.1
Total U.S. Consumption
80.4
74.4
77.8
73.3
71.8
Total U.S. Demand
100.0
93.9
97.1
92.4
85.1
U.S. weekly power generation percent by fuel – EIA
Week ended Oct 28
Week ended Oct 21
Week ended Oct 14
Week ended Oct 7
Week ended Sep 30
Wind
17
11
11
9
10
Solar
3
3
4
4
3
Hydro
5
5
5
6
5
Other
3
3
3
2
2
Petroleum
Natural Gas
35
39
41
41
41
Coal
16
19
18
18
19
Nuclear
21
19
19
21
19
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub
Current Day
Prior Day
Henry Hub NG-W-HH-SNL
4.81
4.45
Transco Z6 New York NG-CG-NY-SNL
4.12
3.29
PG&E Citygate NG-CG-PGE-SNL
6.87
6.70
Dominion South NG-PCN-APP-SNL
3.87
3.45
Chicago Citygate NG-CG-CH-SNL
4.35
3.92
Algonquin Citygate NG-CG-BS-SNL
4.65
3.80
SoCal Citygate NG-SCL-CGT-SNL
5.10
4.12
Waha Hub NG-WAH-WTX-SNL
3.15
2.93
AECO NG-ASH-ALB-SNL
0.26
1.40
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub
Current Day
Prior Day
New England EL-PK-NPMS-SNL
59.00
43.75
PJM West EL-PK-PJMW-SNL
65.75
49.00
Ercot North EL-PK-ERTN-SNL
58.25
36.00
Mid C EL-PK-MIDC-SNL
68.00
71.50
Palo Verde EL-PK-PLVD-SNL
54.75
57.25
SP-15 EL-PK-SP15-SNL
36.00
54.25
