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UPDATE 1-U.S. natgas drops 11% as warmer weather forecast tempers demand view

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  • NG=F
  • LNG

(Adds details, closing price) Nov 29 (Reuters) - U.S. natural gas futures slid more than 11% on Monday, erasing gains from a post-Thanksgiving rally in the previous session, hurt by forecasts for warmer-than-usual weather that could result in lower heating demand over the next two weeks. On their first trading day as the front-month, gas futures for January delivery dropped 62.3 cents or 11.4% to settle at $4.854 per million British thermal units (mmBtu). That was their biggest daily percentage decline since January 2019. "Fundamentally, it's driven by the forecasted warmer-than-normal weather for the next couple of weeks," said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City. "However, this is very likely a temporary break given that the winter is still hiding its face and the international gas prices are much higher than we have here domestically." Data provider Refinitiv projected 321 heating degree days (HDDs) over the next two weeks compared with a 30-year normal of 366 HDDs for the period. HDDs, used to estimate demand to heat homes and businesses, measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). Refinitiv said output in the U.S. Lower 48 states averaged 96.5 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019. However, Refinitiv forecasted that average U.S. gas demand, including exports, would rise from 112.0 bcfd this week to 116.2 bcfd next week as the weather turns seasonally colder and homes and businesses crank up their heaters. With gas prices around $30 per mmBtu in Europe and $35 in Asia, compared with about $5 in the United States, traders said buyers around the world will keep purchasing all the LNG the U.S. can produce. The amount of gas flowing to U.S. LNG export plants averaged 11.4 bcfd so far in November, up from 10.5 bcfd in October as the sixth train at Cheniere Energy Inc's Sabine Pass plant in Louisiana started producing LNG. That compares with a monthly record of 11.5 bcfd in April. Week ended Week ended Year ago Five-year Nov 19 Nov 12 Nov 19 average (Actual) (Actual) Nov 19 U.S. weekly natgas storage change (bcf): -21 26 -11 -44 U.S. total natgas in storage (bcf): 3,623 3,643 3,943 3,681 U.S. total storage versus 5-year average -1.6% -2.2% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2020 (2016-2020) Henry Hub 5.20 5.26 2.87 2.13 2.66 Title Transfer Facility (TTF) 30.84 29.81 4.84 3.24 5.19 Japan Korea Marker (JKM) 34.89 36.21 6.80 4.22 6.49 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 321 344 356 370 366 U.S. GFS CDDs 4 4 2 6 5 U.S. GFS TDDs 325 348 358 376 371 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 96.8 98.0 98.2 91.7 84.6 U.S. Imports from Canada 8.4 8.9 9.1 8.8 8.0 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.2 Total U.S. Supply 105.3 106.9 107.2 100.5 92.8 U.S. Demand (bcfd) U.S. Exports to Canada 3.1 3.3 3.3 2.5 2.7 U.S. Exports to Mexico 5.3 5.3 5.4 5.7 4.9 U.S. LNG Exports 11.7 12.1 11.9 10.9 4.6 U.S. Commercial 13.4 13.3 14.8 14.6 11.1 U.S. Residential 21.1 20.9 23.8 24.1 16.5 U.S. Power Plant 26.2 26.1 25.3 28.4 24.5 U.S. Industrial 23.9 23.7 24.2 25.1 23.5 U.S. Plant Fuel 4.8 4.8 4.8 4.8 4.7 U.S. Pipe Distribution 2.4 2.4 2.5 2.4 2.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 91.9 91.3 95.7 99.5 82.5 Total U.S. Demand 112.0 112.0 116.2 118.6 94.7 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Dec 3 Nov 26 Nov 19 Nov 12 Nov 5 Wind 12 14 14 14 9 Solar 2 2 2 2 3 Hydro 6 6 6 6 6 Other 2 2 2 2 2 Petroleum 1 1 1 1 1 Natural Gas 35 34 35 35 40 Coal 19 20 19 19 19 Nuclear 23 22 21 21 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 4.93 4.95 Transco Z6 New York 4.91 4.91 PG&E Citygate 6.00 6.05 Dominion South 4.47 4.46 Chicago Citygate 4.62 4.57 Algonquin Citygate 5.92 5.39 SoCal Citygate 5.22 5.51 Waha Hub 4.72 4.70 AECO 4.24 3.41 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 52.75 64.00 PJM West 24.00 27.50 Ercot North 40.00 38.00 Mid C 34.00 42.00 Palo Verde 38.25 14.00 SP-15 42.00 53.00 (Reporting by Bharat Govind Gautam in Bengaluru and Scott DiSavino; additional reporting by Brijesh Patel; Editing by Kirsten Donovan and Dan Grebler)