US natgas prices gain 3% on output drop, CNX delays well completions

By Scott DiSavino March 12 (Reuters) - U.S. natural gas futures gained about 3% on Tuesday as output continued to decline with another energy firm planning to delay well completions after gas prices collapsed to a 3-1/2-year low in February. In response to low gas prices, U.S. energy company CNX Resources said it will delay well completions activities and produce less of the fuel this year. Traders said the roughly 6% drop in U.S. output over the past month showed that several energy firms, including EQT and Chesapeake Energy, were following through on plans to cut production this year. EQT is currently the biggest U.S. gas producer and Chesapeake Energy will soon to become the country's biggest gas producer after its merger with Southwestern Energy. Front-month gas futures for April delivery on the New York Mercantile Exchange rose 4.9 cents, or 2.8%, to $1.808 per million British thermal units (mmBtu) at 9:21 a.m. EDT (1321 GMT). On Monday, the contract closed at its lowest since Feb. 27 for a third day in a row. Prices fell as low as $1.511 per mmBtu on Feb. 27, their lowest since June 2020, as near-record output, mostly mild weather and low heating demand this winter allowed utilities to leave significantly more gas in storage than usual for this time of year. Analysts estimated current gas stockpiles were around 38% above normal levels. SUPPLY AND DEMAND Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 100.4 billion cubic feet per day (bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, output was on track to drop by around 6.1 bcfd over the last month to a preliminary seven-week low of 99.3 bcfd. That would be the lowest daily production since early February 2023, excluding the massive 17.3-bcfd drop in mid-January due to freezing wells. Meteorologists projected weather across the Lower 48 states would remain warmer than normal through March 18 before turning to near- to colder-than-normal levels from March 19-27. With cooler weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 110.3 bcfd this week to 113.2 bcfd next week. The forecast for this week was lower than LSEG's outlook on Monday. Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants slid to an average of 13.4 bcfd so far in March, down from 13.7 bcfd in February. That compares with a monthly record of 14.7 bcfd in December. Analysts do not expect U.S. LNG feedgas to return to record levels until Freeport LNG's export plant in Texas returns to full service, which some market watchers say could happen in mid- to late-March. 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. Global gas prices were trading around $8 at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) benchmark in Asia. Week ended Week ended Year ago Five-year Mar 8 Mar 1 Mar 8 average Forecast Actual Mar 8 U.S. weekly natgas storage change (bcf): +3 -40 -65 -87 U.S. total natgas in storage (bcf): 2,337 2,334 1,989 1,696 U.S. total storage versus 5-year average 37.8% 30.9% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2023 (2018-2022) Henry Hub 1.79 1.76 2.41 2.66 3.60 Title Transfer Facility (TTF) 7.93 7.94 13.72 13.04 14.39 Japan Korea Marker (JKM) 8.47 8.46 13.59 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 236 236 317 274 269 U.S. GFS CDDs 12 13 13 16 14 U.S. GFS TDDs 248 249 330 290 283 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 100.3 100.6 101.0 101.7 95.1 U.S. Imports from Canada 7.3 7.7 8.3 8.6 8.4 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 107.6 108.4 109.2 110.3 103.6 U.S. Demand (bcfd) U.S. Exports to Canada 3.7 3.7 3.7 2.7 3.0 U.S. Exports to Mexico 6.5 6.3 6.3 5.2 5.4 U.S. LNG Exports 13.4 13.2 13.2 13.2 9.2 U.S. Commercial 10.5 10.6 11.1 14.3 12.3 U.S. Residential 15.8 15.6 16.4 22.8 19.4 U.S. Power Plant 30.6 29.8 30.7 30.4 23.8 U.S. Industrial 23.5 23.7 24.2 24.1 26.8 U.S. Plant Fuel 5.0 5.0 5.0 4.9 5.0 U.S. Pipe Distribution 2.3 2.3 2.4 2.3 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 87.8 87.0 89.9 98.9 89.7 Total U.S. Demand 111.5 110.3 113.2 120.0 107.3 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 81 80 83 107 81 Jan-Jul 81 80 77 102 79 Oct-Sep 83 82 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Mar 15 Mar 8 Mar 1 Feb 23 Feb 16 Wind 13 15 16 13 11 Solar 5 4 4 4 4 Hydro 7 7 7 7 7 Other 1 1 1 1 1 Petroleum 0 0 0 0 0 Natural Gas 40 39 38 40 41 Coal 13 13 16 15 16 Nuclear 21 21 21 20 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.54 1.54 Transco Z6 New York 1.35 1.48 PG&E Citygate 2.54 2.62 Eastern Gas (old Dominion South) 1.27 1.44 Chicago Citygate 1.38 1.48 Algonquin Citygate 1.47 1.70 SoCal Citygate 1.98 2.05 Waha Hub 0.66 0.65 AECO 1.20 1.22 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 23.50 26.00 PJM West 22.50 21.75 Ercot North 14.25 24.50 Mid C 27.50 36.98 Palo Verde 17.00 5.25 SP-15 11.50 5.50 (Reporting by Scott DiSavino Editing by Ros Russell)