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U.S. natgas climbs to 2-month high on hot weather, pipe shutdown

(Adds closing prices) July 7 (Reuters) – U.S. natural gas futures rose to a two-month high on Tuesday with output on track to fall by a record amount after a pipe shutdown in West Virginia and on forecasts confirming Monday’s hot weather outlook that will keep air conditioners humming for the next two weeks. The price rise comes despite coronavirus demand destruction, stockpiles swelling toward record highs, and a collapse in liquefied natural gas (LNG) exports to their lowest levels since 2018. Front-month gas futures rose 4.6 cents, or 2.5%, to settle at $1.876 per million British thermal units. That is the highest price since May 7 and up 31% 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 19% and 37%, respectively, over the front-month, on hopes the economy will rebound and energy demand will increase as state governments lift coronavirus-linked lockdowns. U.S. gas production was on track to drop by a record amount on Tuesday to its lowest level since September 2018 due in part to unplanned work on TC Energy Corp’s Mountaineer Xpress pipeline in West Virginia. Overall, however, Refinitiv said production in the Lower 48 U.S. states averaged 88.1 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, will rise from 88.8 bcfd this week to 91.9 bcfd next week. That is a little lower than its forecasts on Monday. 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. Flows to Freeport LNG in Texas fell to zero for the first time since August 2019 when its first liquefaction train was still in test mode. 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 1 2 4 3 U.S. GFS CDDs 254 255 227 206 198 U.S. GFS TDDs 255 256 229 210 201 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 88.4 88.8 90.9 78.1 U.S. Imports from Canada 6.4 6.5 6.7 5.8 8.2 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.2 Total U.S. Supply 93.8 94.9 95.5 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 3.2 3.5 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 42.3 44.6 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 2.1 2.1 2.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 74.4 77.9 80.6 76.3 72.0 Total U.S. Demand 86.3 88.8 91.9 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> 1.71 1.58 Transco Z6 New York <NG-CG-NY-SNL> 1.76 1.49 PG&E Citygate <NG-CG-PGE-SNL> 2.37 2.01 Dominion South <NG-PCN-APP-SNL> 1.50 1.30 Chicago Citygate <NG-CG-CH-SNL> 1.71 1.51 Algonquin Citygate <NG-CG-BS-SNL> 1.75 1.44 SoCal Citygate <NG-SCL-CGT-SNL> 1.80 1.36 Waha Hub <NG-WAH-WTX-SNL> 1.11 1.01 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England <EL-PK-NPMS-SNL> 20.25 24.50 PJM West <EL-PK-PJMW-SNL> 32.25 27.75 Ercot North <EL-PK-ERTN-SNL> 24.25 30.00 Mid C <EL-PK-MIDC-SNL> 13.20 8.50 Palo Verde <EL-PK-PLVD-SNL> 24.25 22.50 SP-15 <EL-PK-SP15-SNL> 25.00 23.75 (Reporting by Scott DiSavino; Editing by Bernadette Baum and Leslie Adler)


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