Reuters - U.S. Natural Gas Futures Ease Of Forecasts For Less Heat

U.S. natgas futures ease on forecasts for less heat, falling crude - Reuters News

24-Jun-2016 08:33:03 AM

June 24 (Reuters) - U.S. natural gas futures eased on Friday on forecasts of less hot weather through mid-July, falling crude oil prices and slightly bigger-than-expected weekly storage injections for the second week in a row.

U.S. crude futures CLc1 collapsed by as much as 6 percent to below $47 a barrel overnight after Britain voted to leave the European Union. (Full Story)
After rising 27 percent over the past four weeks due to an unusually hot start to the summer, front-month gas futures NGc1 were down 3.8 cents, or 1.4 percent, at $2.660 per million British thermal units at 9:04 a.m. EDT (1304 GMT).
Despite a couple of declines this week, the front-month is on track for its fifth straight weekly rise, the longest winning streak since December 2013.
With injections surpassing expectations in recent weeks, some analysts started to warn again that prices would have to remain low in 2016 to pressure producers to cut output and encourage power generators to burn more gas instead of coal to prevent storage caverns from filling to maximum capacity after a warm winter left stockpiles at record highs.
Earlier this week, some analysts said the recent rally showed the market was no longer worried about storage hitting maximum levels because the inventory surplus was narrowing as power generators used record amounts of gas to meet rising air conditioning use.
Spot prices at the Henry Hub benchmark GT-HH-IDX have averaged $2.02 so far this year, while futures for the balance of 2016 NGBALst were fetching $2.82. That compares with $2.61 in 2015, the lowest since 1999.
But with spot prices at their highest level since August, some power generators have switched back to coal. In recent days, the premium of gas futures over coal futures QLc1 has climbed above $1 per mmBtu for the first time since August.
Traders say it only becomes profitable for some generators to burn coal, which is less efficient and carries higher environmental and transport costs, if the gas premium exceeds $1 per mmBtu.
The U.S. power sector has burned an average pf 26.0 bcf of gas per day so far in 2016, topping the record 23.7 bcfd of a year earlier, according to Thomson Reuters Analytics.
U.S. drillers, meanwhile, have reduced dry gas output in the lower 48 states to an average of 73.0 bcfd so far this year from a record 73.5 bcfd in 2015.

	Week ended June 24 (Forecast)	Week ended June 17 (Actual)	Year Ago	5-year Average
U.S. natgas storage (change in bcf):	43	62	73	78
Heating & Cooling Degree Days
Two-Week Total	Current Day	Prior Day	30-Year Norm
GFS HDDs	1	2	6
GFS CDDs	222	217	182
EC HDDs	4	2	5
EC CDDs	193	196	170
GFS Gas Consumption (bcfd)
Two-Week Average	Current Day	Prior Day	30-Year Norm
Residential	3.6	3.6	3.6
Commercial	4.3	4.4	4.3
Power	34.8	34.6	26.7
Industrial	19.7	19.8	20.5
Total	62.4	62.3	55.1
EC Gas Consumption (bcfd)
Two-Week Average	Current Day	Prior Day	30-Year Norm
Residential	3.6	3.6	3.7
Commercial	4.3	4.3	4.3
Power	33.4	33.8	26.8
Industrial	19.7	19.7	20.5
Total	61.0	61.4	55.3
Thomson Reuters Supply Estimates (bcfd):
	Current Day	Prior Day	Prior Year	High since 2011
U.S. Lower 48 dry production	72.3	72.5	74.4	75.2
Net U.S. imports from Canada	5.7	5.9	5.6	8.3
U.S. LNG imports	0.2	0.2	0.3	2.8
U.S. LNG exports	0.7	0.7		0.8
U.S. exports to Mexico	3.7	3.7	3.0	4.3
U.S. gas used due to nuclear outages	0.2	0.2
ICE U.S. Natural Gas Next-Day Prices ($ per mmBtu):
Hub	Current Day	Prior Day
Algonquin E-ALGCIT-IDX		2.67
Dominion South E-DOMSP-IDX		1.88
New York E-TSCO6NY-IDX		1.99
Henry Hub GT-HH-IDX		2.68
Chicago MC-CHICIT-IDX		2.62
SoCal Border W-SOBOR-IDX		2.65
ICE U.S. Power Next-Day Prices ($ per megawatt-hour):
Hub	Current Day	Prior Day
Ercot North SE-ERCONP-IDX		28.73
Mid C W-MIDCP-IDX		14.93
New England E-NEPLMHP-IDX		27.81
Palo Verde W-PVP-IDX		29.41
PJM West E-PJWHRTP-IX		30.66
SP-15 W-SP15-IDX		33.77

 world.