Reuters - U.S. Natural Gas Futures Little Changed Despite Generator Use

U.S. natgas futures little changed despite generator use - Reuters News

11-Jul-2016 08:26:40 AM

July 11 (Reuters) - U.S. natural gas futures on Monday traded within a few cents of unchanged as expectations that power generators would use more of the fuel to meet rising air conditioning demand over the next two weeks offset some weather forecasts calling for less heat during that time.

After sliding 6 percent last week, front-month gas futures NGc1 for August delivery on the New York Mercantile Exchange were up 1 cent, or 0.4 percent, at $2.811 per million British thermal units at 9:19 a.m. EDT (1319 GMT).
August futures NGQ6 remained higher than September's NGQ6 for the ninth day in a row, the longest streak since November 2015, and some analysts said that was a sign the front-month would continue to rise in coming weeks.
Despite last week's decline, the front-month was still up more than 30 percent over the past seven weeks.
That increase pushed the premium of gas futures over coal QLc1 above $1 per mmBtu for the 15th consecutive day, the longest streak since July 2015.
Traders said that due to coal's lower efficiency and higher environmental and transport costs, most generators do not think about switching from gas until the premium exceeds $1.
Spot prices, however, remained relatively low despite weeks of smaller-than-usual storage injections. The amount of gas in inventory remains at all-time highs for this time of year after a warm winter, pressuring producers to cut output and encouraging power generators to keep record amounts of the fuel.
Analysts forecast injections would remain small.
In early estimates, analysts said utilities probably added 64 billion cubic feet of gas into storage during the week ended on Friday. That compared with builds of 39 bcf in the prior week, 95 bcf a year earlier and a five-year average of 77 bcf. EIA/GAS
Analysts noted those storage concerns kept a cap on prices. Spot prices at the Henry Hub benchmark averaged $2.08 so far this year, while futures for the balance of 2016 NGBALst were fetching $2.95. That compares with $2.61 in 2015, the lowest since 1999.
The U.S. power sector has burned an average 26.6 bcf per day so far in 2016, topping the record 24.4 bcfd of a year earlier, according to Thomson Reuters Supply Chain & Commodities Research data.
U.S. drillers have reduced average dry gas output in the lower 48 states to 73.1 bcfd so far this year from a record 73.5 bcfd in 2015.

	Week ended July 8 (Forecast)	Week ended July 1 (Actual)	Year Ago	5-year Average
U.S. natgas storage (change in bcf):	65	39	95	77
Heating & Cooling Degree Days
Two-Week Total	Current Day	Prior Day	30-Year Norm
GFS HDDs	1	1	3
GFS CDDs	230	247	201
EC HDDs	2	3	3
EC CDDs	224	230	188
GFS Gas Consumption (bcfd)
Two-Week Average	Current Day	Prior Day	30-Year Norm
Residential	3.7	3.6	3.7
Commercial	4.4	4.4	4.4
Power	36.7	36.1	29.4
Industrial	19.9	19.9	20.5
Total	64.6	63.9	58.0
EC Gas Consumption (bcfd)
Two-Week Average	Current Day	Prior Day	30-Year Norm
Residential	3.6	3.7	3.7
Commercial	4.4	4.4	4.4
Power	35.9	36.2	29.3
Industrial	19.8	19.7	20.5
Total	63.7	64.0	57.9
Thomson Reuters Supply Chain & Commodities Research (SC&CR)Supply Estimates (bcfd):
	Current Day	Prior Day	Prior Year	High since 2011
U.S. Lower 48 dry production	72.2	72.6	74.6	75.2
Net U.S. imports from Canada	5.3	6.2	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	3.6	3.1	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		2.06
Dominion South E-DOMSP-IDX		1.38
New York E-TSCO6NY-IDX		1.62
Henry Hub GT-HH-IDX		2.77
Chicago MC-CHICIT-IDX		2.65
SoCal Border W-SOBOR-IDX		2.61
ICE U.S. Power Next-Day Prices ($ per megawatt-hour):
Hub	Current Day	Prior Day
Ercot North SE-ERCONP-IDX
Mid C W-MIDCP-IDX		20.98
New England E-NEPLMHP-IDX		30.81
Palo Verde W-PVP-IDX		30.18
PJM West E-PJWHRTP-IX		34.13
SP-15 W-SP15-IDX		31.75

(Reporting by Scott DiSavino; Editing by Lisa Von Ahn)

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

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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. natgas price and storage polls, see: NGAS/POLL
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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