Wires

UPDATE 3-U.S. natgas jumps 4% with oil price drop expected to cut gas output

midday, some analysts noted plunging oil prices could help

(Adds quote, latest prices) March 9 (Reuters) - U.S. natural gas futures jumped over 4% on Monday on forecasts for colder weather and higher heating demand next week than previously expected and expectations the collapse in oil prices would prompt drillers to cut back on oil and gas production. Earlier in the day, gas prices dropped to their lowest in over 21 years as they followed the collapse in oil prices. But gas prices by reducing associated gas production. U.S. oil futures fell as much as 34% in their biggest daily rout since the 1991 Gulf War after Saudi Arabia signaled it would hike output to win market share even though the coronavirus has already left the market oversupplied. Even before crude futures collapsed, gas prices over the past week had been trading within a nickel of their lowest since August 1998 as record production and mild weather enabled utilities to leave more gas in storage this winter, making fuel shortages and prices spikes unlikely. Much of the growth in gas output was coming from gas associated with the production of oil in shale basins like the Permian in West Texas. Since drillers were seeking oil, that production was insensitive to low gas prices. "A large enough decrease in (oil production in) the Permian could support natural gas prices as a whole," Daniel Myers, market analyst at Gelber & Associates in Houston, said in a report. Front-month gas futures for April delivery on the New York Mercantile Exchange rose 7.0 cents, or 4.1%, to settle at $1.778 per million British thermal units (mmBtu). Earlier in the session, gas slid to $1.61 per mmBtu, its lowest since August 1998. If prices drop below that level, they would fall to their lowest since September 1995. Refinitiv, a data provider, projected average demand in the U.S. Lower 48 states, including exports, would rise from 100.7 billion cubic feet per day (bcfd) this week to 107.5 bcfd next week. That compares with Refinitiv's forecast on Friday of 104.4 bcfd this week and 99.6 bcfd next week.

Week ended Week ended Year ago Five-yearMarch 6 Feb. 28 March 6 average(Forecast) (Actual) March 6U.S. natgas storage (bcf): -63 -109 -164

-99

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 257 231 293 280 291U.S. GFS CDDs 14 16 10 14 10U.S. GFS TDDs 271 247 370 294 301

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-YearLast Year Average For

Month U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 93.9 93.7 93.7 88.5 76.9U.S. Imports from Canada 7.1 6.8 7.3 8.6 8.5U.S. LNG Imports 0.1 0.1 0.0 0.1 0.2Total U.S. Supply 101.2 100.5 101.0 97.2 85.6

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 3.0 2.9 3.1 2.6U.S. Exports to Mexico 5.6 5.5 5.6 4.8 3.8U.S. LNG Exports 8.1 7.7 8.2 5.1 1.8U.S. Commercial 13.2 10.8 12.6 13.4 12.3U.S. Residential 20.5 16.1 19.4 21.7 19.4U.S. Power Plant 28.7 27.5 27.8 25.1 23.7U.S. Industrial 23.8 23.0 23.8 23.4 22.6U.S. Plant Fuel 4.6 4.6 4.6 4.6 4.7U.S. Pipe Distribution 2.5 2.2 2.4 2.3 2.5U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1Total U.S. Consumption 93.4 84.5 90.9 90.6 85.3Total U.S. Demand 109.9 100.7 107.5 103.6 93.5

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior DayHenry Hub <NG-W-HH-SNL> 1.76 1.89Transco Z6 New York <NG-CG-NY-SNL> 1.54 1.67PG&E Citygate <NG-CG-PGE-SNL> 2.64 2.64Dominion South <NG-PCN-APP-SNL> 1.52 1.56Chicago Citygate <NG-CG-CH-SNL> 1.52 1.64Algonquin Citygate <NG-CG-BS-SNL> 1.62 1.75SoCal Citygate <NG-SCL-CGT-SNL> 1.90 2.10Waha Hub <NG-WAH-WTX-SNL> 0.25 0.34

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior DayNew England <EL-PK-NPMS-SNL> 19.25 21.00PJM West <EL-PK-PJMW-SNL> 19.50 20.25Ercot North <EL-PK-ERTN-SNL> 15.25 17.50Mid C <EL-PK-MIDC-SNL> 28.75 24.38Palo Verde <EL-PK-PLVD-SNL> 27.75 25.00SP-15 <EL-PK-SP15-SNL> 29.50 28.50

(Reporting by Scott DiSavino; Editing by Nick Zieminski, Lisa Shumaker and Tom Brown)