BUSINESS

U.S. natgas futures gain 4% on colder forecasts

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U.S. natural gas futures gained about 4% on Friday on forecasts for much colder

weather and higher heating demand in mid November than previously expected.

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Traders also noted that prices were climbing with lower output so far this month and on expectations the

Freeport liquefied natural gas (LNG) export plant in Texas would return to service soon.

Freeport LNG expects its 2.1-billion-cubic-feet-per-day (bcfd) export plant to return to at least partial

service in early to mid-November following an unexpected shutdown on June 8 caused by a pipeline explosion.

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At least four vessels were lined up to pick up LNG at Freeport, according to Refinitiv data. Prism

Brilliance, Prism Diversity and Prism Courage were waiting off the coast from the plant, and Prism Agility was

expected to arrive around Nov. 29.

In what has already been an extremely volatile week, front-month gas futures rose 23.2 cents, or

3.9%, to $6.207 per million British thermal units (mmBtu) at 8:07 a.m. EDT (1207 GMT). That follows a rise of

12% on Monday, a drop of 10% on Tuesday, a rise of 10% on Wednesday and a drop of 5% on Thursday.

For the week, the contract was on track to rise about 9% after gaining 15% last week.

In the spot market, mild weather and low heating demand pressured gas prices for Friday in the U.S.

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Northeast, with the Eastern Gas South hub in Pennsylvania at its lowest since November 2020,

New York City at its lowest since April 2021 and the Algonquin hub in New

England at its lowest since June 2021.

Overall, gas futures were still up about 66% so far this year as much higher 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 $34 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $28

at the Japan Korea Marker (JKM) in Asia.

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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 have prevented the

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country from exporting more LNG.

Data provider Refinitiv said that average gas output in the U.S. Lower 48 states fell to 98.1 bcfd so far

in November, down from a record 99.4 bcfd in October. Traders, however, noted that early-month output figures

were usually revised higher later in the month.

With the coming of seasonally colder weather, Refinitiv projected average U.S. gas demand, including

exports, would rise from 97.6 bcfd this week to 100.1 bcfd next week and 119.0 bcfd in two weeks. The forecast

for next week was higher than Refinitiv’s outlook on Thursday.

The average amount of gas flowing to U.S. LNG export plants rose to 11.4 bcfd so far in November, up from

11.3 bcfd in October.

That is still well below the monthly record of 12.9 bcfd in March due mostly to the ongoing outage at

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Freeport. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.

During the first 10 months of 2022, roughly 66%, or 7.0 bcfd, of U.S. LNG exports went to Europe, as

shippers diverted cargoes from Asia to get higher prices. Last year, just 29%, or about 2.8 bcfd, of U.S. LNG

exports went to Europe.

Week ended Week ended Year ago Five-year

Nov 4 Oct 28 Nov 4 average

(Forecast) (Actual) Nov 4

U.S. weekly natgas storage change (bcf): +81 +107 +15 +20

U.S. total natgas in storage (bcf): 3,582 3,501 3,617 3,656

U.S. total storage versus 5-year average -2.0% -3.7%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2021 (2017-2021)

Henry Hub 6.18 5.98 5.12 3.73 2.89

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Title Transfer Facility (TTF) 35.49 37.15 27.71 16.04 7.49

Japan Korea Marker (JKM) 27.82 29.11 32.98 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 30-Year

Norm Norm

U.S. GFS HDDs 251 235 221 228 253

U.S. GFS CDDs 18 20 9 20 14

U.S. GFS TDDs 269 255 230 248 267

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 99.1 98.9 98.4 95.8 89.6

U.S. Imports from Canada 7.5 7.3 7.4 8.7 8.2

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 106.7 106.2 105.8 104.5 97.9

U.S. Demand (bcfd)

U.S. Exports to Canada 2.5 2.6 2.8 2.6 2.9

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U.S. Exports to Mexico 5.5 5.4 5.6 5.4 5.1

U.S. LNG Exports 11.4 11.9 11.6 10.6 6.4

U.S. Commercial 7.5 7.9 8.9 9.8 11.5

U.S. Residential 9.4 10.3 12.6 13.8 17.2

U.S. Power Plant 28.4 29.7 28.7 29.3 26.0

U.S. Industrial 22.6 22.6 228 23.2 24.0

U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9

U.S. Pipe Distribution 2.0 2.1 2.1 2.1 2.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 74.8 77.7 80.1 83.2 85.8

Total U.S. Demand 94.2 97.6 100.1 101.8 100.2

U.S. weekly power generation percent by fuel – EIA

Week ended Week ended Week ended Week ended Week ended

Nov 4 Oct 28 Oct 21 Oct 14 Oct 7

Wind 10 15 11 11 9

Solar 3 3 3 4 4

Hydro 5 5 5 5 6

Other 2 2 3 3 2

Petroleum 0 0 0 0 0

Natural Gas 40 37 39 41 41

Coal 19 18 19 18 18

Nuclear 20 19 19 19 21

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 4.65 4.58

Transco Z6 New York 2.00 3.16

PG&E Citygate 7.96 8.21

Dominion South 1.39 2.90

Chicago Citygate 3.34 3.48

Algonquin Citygate 2.50 3.63

SoCal Citygate 7.21 7.40

Waha Hub 2.27 2.15

AECO 3.74 4.08

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior Day

New England 44.25 50.50

PJM West 41.75 46.25

Ercot North 42.25 34.00

Mid C 49.00 72.00

Palo Verde 46.50 55.00

SP-15 70.50 69.25

(Reporting by Scott DiSavino

Editing by Nick Zieminski)

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