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U.S. natgas jumps to 5-week high on hot weather, rising cooling demand

(Adds latest prices) July 6 (Reuters) – U.S. natural gas futures jumped to a five-week high on Monday on forecasts calling for warmer weather and higher air conditioning demand over the next two weeks than previously expected. That price move comes despite rising output, coronavirus demand destruction, swelling stockpiles and a collapse in liquefied natural gas (LNG) exports to their lowest since 2018. Front-month gas futures rose 9.6 cents, or 5.5%, to settle at $1.830 per million British thermal units. That is their highest close since May 29 and is up almost 30% from a near 25-year low of $1.432 hit about a week ago. Looking ahead, futures for the balance of 2020 and calendar 2021 were trading about 22% and 43% over the front-month, respectively, on hopes the economy and energy demand will rebound as state governments lift coronavirus-linked lockdowns. Refinitiv said production in the Lower 48 U.S. states averaged 88.7 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June compared with an all-time monthly high of 95.4 bcfd in November. As the weather heats up, Refinitiv forecasts U.S. demand, including exports, would rise from 89.0 bcfd this week to 92.6 bcfd next week. That is higher than its forecasts on Thursday before the long U.S. July Fourth holiday weekend. Pipeline gas flowing to U.S. LNG export plants averaged just 3.2 bcfd (33% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February. Utilization was about 90% in 2019. U.S. pipeline exports, meanwhile, were mixed. Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June but still well below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico, however, averaged 5.2 bcfd so far this month, down from 5.4 bcfd in June and a record 5.6 bcfd in March. Week ended Week ended Year ago Five-year Jul 3 June Jul 3 average (Forecast) 26(Actual) Jul 3 U.S. natgas storage (bcf): +65 +65 +83 +68 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 1 2 2 4 3 U.S. GFS CDDs 255 248 227 206 198 U.S. GFS TDDs 256 250 229 210 201 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 87.4 89.0 88.6 90.9 78.1 U.S. Imports from Canada 6.4 6.4 6.5 5.8 8.2 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.2 Total U.S. Supply 93.8 95.4 95.1 96.7 86.5 U.S. Demand (bcfd) U.S. Exports to Canada 2.4 2.4 2.4 2.5 2.0 U.S. Exports to Mexico 5.4 5.2 5.4 5.2 4.2 U.S. LNG Exports 4.1 3.3 3.6 5.9 2.1 U.S. Commercial 4.3 4.3 4.3 4.4 4.4 U.S. Residential 3.5 3.5 3.5 3.6 3.5 U.S. Power Plant 38.9 42.4 45.2 40.3 37.2 U.S. Industrial 21.3 21.3 21.5 21.4 20.3 U.S. Plant Fuel 4.3 4.4 4.4 4.4 4.4 U.S. Pipe Distribution 2.0 2.1 2.2 2.1 2.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 74.4 78.1 81.2 76.3 72.0 Total U.S. Demand 86.3 89.0 92.6 89.9 80.3 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub <NG-W-HH-SNL> 1.58 1.69 Transco Z6 New York <NG-CG-NY-SNL> 1.49 1.46 PG&E Citygate <NG-CG-PGE-SNL> 2.01 2.15 Dominion South <NG-PCN-APP-SNL> 1.30 1.33 Chicago Citygate <NG-CG-CH-SNL> 1.51 1.55 Algonquin Citygate <NG-CG-BS-SNL> 1.44 1.51 SoCal Citygate <NG-SCL-CGT-SNL> 1.36 1.54 Waha Hub <NG-WAH-WTX-SNL> 1.01 1.21 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England <EL-PK-NPMS-SNL> 24.50 23.75 PJM West <EL-PK-PJMW-SNL> 27.75 29.28 Ercot North <EL-PK-ERTN-SNL> 30.00 34.00 Mid C <EL-PK-MIDC-SNL> 8.50 2.05 Palo Verde <EL-PK-PLVD-SNL> 22.50 22.25 SP-15 <EL-PK-SP15-SNL> 23.75 22.75 (Reporting by Scott DiSavino; Editing by Nick Zieminski and Andrea Ricci)


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