Reuters - U.S. Natural Gas Futures Little Changed Amid Hot Weather Forecasts

U.S. natgas futures little changed amid hot weather forecasts - Reuters News

27-Jun-2016 07:51:16 AM

June 27 (Reuters) - U.S. natural gas futures on Monday traded within a few cents of unchanged as the market considered weekend weather forecasts calling for continued hot weather through mid July, but not quite as hot as forecast late last week.

As consumers cranked up their air conditioners to escape the heat, power generators are burning record amounts of gas to generate power, keeping that fuel from flowing into inventories, which are already at all-time highs for this time of year.
After rising 29 percent over the past five weeks, gas futures NGc1 for July delivery were up 1.8 cents, or 0.7 percent, at $2.680 per million British thermal units on its second to last day as the front-month at 8:40 a.m. EDT (1240 GMT).
August futures, which will soon be the front-month, were up five cents at $2.74.
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.
Last week, some analysts forecast 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.
But with spot gas prices near their highest levels since August, the premium of gas futures over coal futures QLc1 remained over $1 per mmBtu for a sixth day in a row, pushing some power generators to switch back to coal.
Traders say it becomes profitable for some generators to burn coal, which is less efficient and carries higher environmental and transport costs, when the gas premium exceeds $1.
Spot prices at the Henry Hub benchmark GT-HH-IDX have averaged $2.03 so far this year, while futures for the balance of 2016 NGBALst were fetching $2.83. That compares with $2.61 in 2015, the lowest since 1999.
The U.S. power sector has burned an average pf 26.1 bcf of gas per day so far in 2016, topping the record 23.9 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):	42	62	73	78
Heating & Cooling Degree Days
Two-Week Total	Current Day	Prior Day	30-Year Norm
GFS HDDs	2	2	5
GFS CDDs	224	215	187
EC HDDs	3	4	5
EC CDDs	197	193	175
GFS Gas Consumption (bcfd)
Two-Week Average	Current Day	Prior Day	30-Year Norm
Residential	3.6	3.6	3.7
Commercial	4.4	4.3	4.4
Power	35.2	33.9	27.5
Industrial	19.7	19.7	20.5
Total	63.0	61.5	56.0
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	33.7	33.4	27.3
Industrial	19.7	19.7	20.5
Total	61.3	61.0	55.8
Thomson Reuters Supply Estimates (bcfd):
	Current Day	Prior Day	Prior Year	High since 2011
U.S. Lower 48 dry production	72.7	72.5	74.7	75.2
Net U.S. imports from Canada	6.0	5.9	5.4	8.3
U.S. LNG imports	0.2	0.2	0.3	2.8
U.S. LNG exports	0.3	0.3		0.8
U.S. exports to Mexico	3.8	3.7	3.0	4.3
U.S. gas used due to nuclear outages	0.3	0.2
ICE U.S. Natural Gas Next-Day Prices ($ per mmBtu):
Hub	Current Day	Prior Day
Algonquin E-ALGCIT-IDX		2.64
Dominion South E-DOMSP-IDX		1.75
New York E-TSCO6NY-IDX		1.88
Henry Hub GT-HH-IDX		2.67
Chicago MC-CHICIT-IDX		2.59
SoCal Border W-SOBOR-IDX		2.66
ICE U.S. Power Next-Day Prices ($ per megawatt-hour):
Hub	Current Day	Prior Day
Ercot North SE-ERCONP-IDX		34.00
Mid C W-MIDCP-IDX		33.18
New England E-NEPLMHP-IDX
Palo Verde W-PVP-IDX		44.02
PJM West E-PJWHRTP-IX		38.48
SP-15 W-SP15-IDX		44.77

(Reporting by Scott DiSavino; Editing by Bernadette Baum)

(( scott.disavino@thomsonreuters.com ; +1 646 223-6072; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net ))

For Thomson Reuters Analytics, see: Open
For Thomson Reuters Interactive Map, type 'Interactive Map' in the box at upper left of the Reuters Eikon terminal.
    
For graphics on Baker Hughes rig counts, see:
http://graphics.thomsonreuters.com/15/rigcount/index.html
    
For next-day ICE U.S. gas prices, see: 0#GAS-IDX=ICE
    
For next-day ICE U.S. power prices, see: 0#POWER-IDX=ICE
For U.S. nuclear power outages, see: NUKE/ 
    
For U.S. Northwest hydro power report, see: NWRFC
    
For U.S. natural gas inventories vs five-year range, see: http://link.reuters.com/deh95w
For natural gas rig count vs futures price, see: http://link.reuters.com/nuz86t

Keywords: USA-NATGAS/NYMEX

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