US natural gas futures gain 3% as production decline raises storage concerns


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US natural gas futures gained around 3% on Tuesday on concerns that Russia may cut off gas

flows to Poland and expectations that recent declines in production due to cold weather in North Dakota and the

The Rockies will reduce the amount of gas utilities can pump into storage in the coming weeks.

Russian energy giant Gazprom PAO told Poland’s Polskie Górnictwo Naftowe i Gazownictwo SA

(PGNiG) will stop gas supply along the Yamal pipeline from Wednesday morning.

Traders also noted that technical factors likely also played a role in Tuesday’s trade with the upcoming

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May options expiration.

“Trader positioning towards May options expiry likely to dominate trading today,” analysts

at energy consulting group EBW Analytics said, noting that “Over the past year, the previous month’s contract has

increased in eight out of twelve months…on the expiration day of the options,”

In its penultimate day as a US advance month, gas futures for May delivery at the New York

The Mercantile Exchange (NYMEX) rose 18.1 cents, or 2.7%, to close at $6.850 per million British thermal units.

(mmBtu). NYMEX gas options expire the day prior to expiration of the futures contract.

Futures for June, soon to be the previous month, gained around 2.5% to $6.98 per mmBtu.

US gas futures are up about 82% year-to-date as higher global prices have kept US demand low.

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liquefied natural gas (LNG) exports near record levels since Russia invaded Ukraine on February 24.

about $31 per mmBtu in Europe and $25 in Asia.

However, the US gas market remains largely insulated from those higher global prices because the United States

The United States is the world’s leading gas producer, with all the fuel it needs for domestic use, while capacity constraints

inhibit exports of more LNG no matter how much world prices rise.

Data provider Refinitiv said average gas production in the lower 48 US states rose to 94.3 billion cubic

feet per day (bcfd) so far in April from 93.7 bcfd in March. That compares with a monthly record of 96.3 bcfd.

in December 2021.

On a daily basis, however, production was on track to drop by around 3.9 bcfd in the last three days to a

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preliminary 91.6 bcfd on Tuesday, the lowest since early February. Traders said most of those drops were

caused by freezing wells in North Dakota and the Rocky Mountains. Those wells are likely to be back in service during the

next week or so as the weather warms up. Preliminary data is often revised.

Refinitiv projected average US gas demand, including exports, to drop from 92.2 bcfd this week to

90.6 bcfd next week. Those forecasts were similar to Refinitiv’s outlook on Monday.

The amount of gas flowing to US LNG export plants fell from a record 12.9 bcfd in March to 12.3 bcfd, so

away in April primarily due to declines at Freeport LNG facilities in Texas. America can turn around 13.2

bcfd of gas in LNG.

Since the United States will not be able to produce much more LNG any time soon, the country has worked

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with allies to divert LNG exports to Europe to help European Union (EU) and other countries break their

dependence on Russian gas.

Russia, the world’s second largest gas producer, provides between 30% and 40% of Europe’s gas, with a total of approximately

18.3 bcfd in 2021.

Week ended Week ended One year ago Five years

Apr 22 Apr 15 Apr 22 average

(Forecast) (Current) April 22

US natural gas storage weekly change (bcf): +24 +53 +18 +53

Total US natural gas in storage (bcf): 1,474 1,450 1,896 1,795

Total US storage vs. 5-year average -17.9% -16.8%

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

Last year average Average

2021 (2017-2021)

Henry hub 6.96 6.67 2.69 3.73 2.89

Title Transfer Facility (TTF) 28.84 29.24 7.15 16.04 7.49

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Japan Korea Marker (JKM) 25.40 25.50 7.80 18.00 8.95

Refinitiv Heating (HDD), Cooling (CDD), and Total (TDD) Degree Days

Total Two-Week Forecast Current Day Previous Day Previous Year 10 Years 30 Years

norm norm

US GFS Hard Drives 102 108 102 108 103

US CDD GFS 69 62 55 53 53

GFS US TDD 171 170 157 161 156

Refinitiv US GFS Weekly Supply and Demand Forecasts

Previous week Current week Next week This week Five years

Last year’s average for

Month

US supply (bcfd)

US Low 48 Dry Production 94.2 93.9 94.7 91.9 84.8

US imports from Canada 8.2 8.7 8.3 7.6 7.8

US LNG imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 102.4 102.6 103.0 99.5 92.7

US demand (bcfd)

US exports to Canada 2.6 3.0 2.9 2.4 2.6

Exports from the United States to Mexico 6.4 6.1 6.0 6.1 4.6

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US LNG exports 12.0 12.2 12.4 11.4 5.2

US Commercial 9.3 7.6 6.6 6.8 8.3

US Residential 13.2 9.8 7.9 8.4 11.8

US power plant 25.4 24.7 26.5 25.7 24.0

US industrials 22.8 22.1 21.7 22.1 22.0

US fuel oil 4.7 4.6 4.7 4.7 4.6

US pipeline distribution 2.1 1.9 1.8 1.9 2.2

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US consumption 77.5 70.8 69.3 69.7 73.0

Total US demand 98.6 92.2 90.6 89.6 85.4

US Percentage of Weekly Power Generation by Fuel – EIA

Week Ended Week Ended Week Ended Week Ended Week Ended

April 29 April 22 April 15 April 8 April 1

Wind 19 16 17 15 15

solar 4 4 4 4 4

Hydro 6 7 7 8 8

Other 2 2 2 2 2

Oil 0 0 0 0 0

Natural Gas 30 33 32 33 32

Coal 18 19 19 19 19

Nuclear 20 19 19 19 20

SNL US Natural Gas Overnight Prices ($ per mmBtu)

Hub Current day Previous day

Henry’s Center 6.42 6.59

Transco Z6 New York 5.88 5.71

PG&E Citygate 7.49 7.45

southern domain 5.77 5.60

chicago city gate 6.61 6.35

Algonquin Town Gate 7.81 5.92

Citygate Southern California 6.86 6.50

waha center 6.15 6.20

AECO 5.39 5.17

SNL US Power Overnight Prices ($ per megawatt-hour)

Current day hub

New England 77.25 58.50

PJM West 63.75 40.75

Ercot North 59.00 59.50

middle C 83.50 80.75

green stick 86.00 88.00

SP-15 74.50 73.25

(Reporting by Scott DiSavino; Editing by Jonathan Oatis and Nick Zieminski)

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