US natgas prices gain over 3% on higher demand, strong LNG exports

Dec 18 (Reuters) - U.S. natural gas futures climbed more than 3% on Monday, lifted by seasonal demand and as record amounts of gas flowed to liquefied natural gas (LNG) export plants. Front-month gas futures for January delivery on the New York Mercantile Exchange (NYMEX) were up 7.9 cents, or 3.2%, at $2.57 per million British thermal units (mmBtu) as of 10:29 a.m. EST, (1529 GMT). "We're seeing a little bit of weather-based demand creeping onto the maps ... There is more hope for the natural gas markets as we continue to see strong exports as the LNG terminals are consuming roughly 15 billion cubic feet a day and that's going to continue," said Gary Cunningham, director of market research at Tradition Energy. Gas flows to the seven big U.S. LNG export plants have risen to an average of 14.7 bcfd so far in December, up from a record 14.3 bcfd in November. Financial firm LSEG forecast U.S. gas demand in the Lower 48, including exports, at 126.7 bcfd this week, up from last week's 125 bcfd, buoyed by the usual seasonal cooling at this time of year. However, demand was projected to slide to 122.0 bcfd during the next week when many businesses and government offices shut for the Christmas holiday. Market participants also took stock of the mounting attacks by the Iran-aligned Yemeni Houthi militant group on ships in the Red Sea that are disrupting maritime trade as leading global freight firms reroute around the Cape of Good Hope to avoid the Suez Canal, which connects the Mediterranean with the Red Sea. "Given the importance of the Red Sea and Suez Canal as a crucial transit point for both crude oil and natural gas, these suspensions mean that cargos face a lengthy diversion around the Horn of Africa which will add significant costs to company supply chains, as well as having significant inflationary impacts," Michael Hewson, chief market analyst at CMC Markets, said in a note. Disruptions to Suez Canal traffic would have only a limited impact on LNG markets as they would not significantly reduce global availability, Goldman Sachs said in a note. "We note that no Suez-related LNG flow disruption has been reported at this point, to our knowledge, though today's announcement by BP that it will halt all of its shipments through the Red Sea suggests this is likely to happen to some degree." Earlier last week, the front-month was trading in technically oversold territory. Prices were down more than 20% in the month of November. "Perhaps this is the market's way of saying – Oops, prices have fallen too far and we need to get them up a bit," said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City. "The degree of price uptick depends on how severe the January and February cold weather will be." LSEG said average gas output in the Lower 48 U.S. states has risen to 108.4 bcfd so far in December from a record 108.3 bcfd in November. U.S. gas prices could start rising due to progressive erosion of a domestic inventory overhang and to higher international demand for U.S. gas and LNG, Intesa Sanpaolo said in a note. "In our baseline scenario, we forecast the first month Henry Hub natural gas future to average $3.2/MMBtu in 2024." Week ended Week ended Year ago Five-year Dec 15 Dec 8 Dec 15 average Forecast Actual Dec 15 U.S. weekly natgas storage change (bcf): -80 -55 -82 -107 U.S. total natgas in storage (bcf): 3,584 3,664 3,337 3,297 U.S. total storage versus 5-year average 8.7% 7.6% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2017-2021) Henry Hub 5.77 6.54 2.89 2.57 2.40 Title Transfer Facility (TTF) 36.68 40.50 7.49 11.23 10.83 Japan Korea Marker (JKM) 32.34 34.11 8.95 11.77 15.33 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 324 334 362 367 381 U.S. GFS CDDs 1 1 11 6 5 U.S. GFS TDDs 325 335 373 373 38 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year (2018-2022) Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 102.8 94.2 108.9 108.7 108.7 U.S. Imports from Canada8 10.0 9.1 8.6 8.5 8.9 U.S. LNG Imports 0.0 0.2 0.0 0.0 0.0 Total U.S. Supply 112.8 103.5 117.5 117.2 117.7 U.S. Demand (bcfd) U.S. Exports to Canada 3.4 3.2 3.4 3.3 3.3 U.S. Exports to Mexico 5.2 5.0 3.8 3.9 4.4 U.S. LNG Exports 12.6 8.6 14.7 15.0 14.5 U.S. Commercial 15.4 14.6 13.8 13.9 13.1 U.S. Residential 25.8 24.7 22.3 22.5 21.2 U.S. Power Plant 30.4 28.6 34.1 35.2 33.3 U.S. Industrial 24.7 25.0 24.7 24.7 24.1 U.S. Plant Fuel 5.3 5.3 5.4 5.4 5.4 U.S. Pipe Distribution 2.7 2.9 2.7 2.8 2.7 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 104.4 101.2 103.1 104.5 99.9 Total U.S. Demand 125.6 118.0 125.0 126.7 122.0 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 82 83 83 107 81 Jan-Jul 81 81 77 102 79 Oct-Sep 81 82 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Dec 22 Dec 15 Dec 8 Dec 1 Nov 24 Wind 11 12 10 11 Solar 3 3 3 3 Hydro 6 5 6 6 Other 2 2 2 2 Petroleum 0 0 0 0 Natural Gas 41 40 42 39 Coal 17 17 17 16 Nuclear 20 21 20 22 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.44 2.39 Transco Z6 New York 1.64 1.74 PG&E Citygate 3.93 3.85 Eastern Gas (old Dominion South) 1.54 1.64 Chicago Citygate 2.20 2.12 Algonquin Citygate 1.88 2.02 SoCal Citygate 3.48 3.60 Waha Hub 1.96 1.94 AECO 1.76 1.25 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 27.00 28.25 PJM West 24.50 32.50 Ercot North 18.00 22.00 Mid C 62.68 51.00 Palo Verde 47.00 52.25 SP-15 43.50 54.50 (Reporting by Sherin Elizabeth Varghese and Ashitha Shivaprasad in Bengaluru; Editing by Paul Simao)