Wires

UPDATE 1-U.S. natgas futures fall over 4% with oil decline and small storage draw

U.S.

draw@ (Adds latest prices, EIA report) March 12 (Reuters) - U.S. natural gas futures fell over 4% on Thursday with a 6% drop in oil prices and a federal report showing a smaller-than-expected storage draw last week. That decline in gas futures came despite forecasts for cooler weather and higher heating demand in the United States over the next two weeks than earlier expected. The U.S. Energy Information Administration (EIA) said utilities pulled 48 billion cubic feet (bcf) of gas from storage during the week ended March 6. That was lower than the 59-bcf decline analysts expected in a Reuters poll and compares with a drop of 164 bcf during the same week last year and a five-year (2015-19) average reduction of 99 bcf for the period. The decrease for the week ended March 6 cut stockpiles to 2.043 trillion cubic feet (tcf), 12.5% above the five-year average of 1.816 tcf for this time of year. Front-month gas futures for April delivery on the New York Mercantile Exchange (NYMEX) fell 8.1 cents, or 4.3%, to $1.797 per million British thermal units (mmBtu) at 10:40 a.m. EDT (1440 GMT0. Before EIA released its report, the front-month was down 3.9%. Price swings earlier in the week caused gas traders to boost total futures volume on the NYMEX to 1,039,442 contracts on March 10, the highest since November 2018 when trading hit a record high of more than 1.6 million contracts. Those big price swings also caused at-the-money implied volatility for the front-month to jump to 53.8%, its highest since December. That is an increase of more than 50% since volatility fell to a recent low in late February. Oil prices dropped on Thursday following surprise travel restrictions imposed President Donald Trump in an attempt to halt the spread of coronavirus after the World Health Organization described the outbreak as a pandemic. Earlier in the week gas futures jumped over 13% on expectations the oil price collapse would cause drillers to cut back on oil and associated gas production in shale basins like the Permian in West Texas and eastern New Mexico, allowing demand to absorb some of the gas supply glut that has built up in recent years. Longer-term, gas prices were down 37% since hitting an eight-month high of $2.905 per mmBtu in early November because near-record production and mild winter weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely. Data provider Refinitiv projected average demand in the U.S. Lower 48 states, including exports, would edge up from 101.4 billion cubic feet per day (bcfd) this week to 104.5 bcfd next week. That is higher than Refinitiv's forecast on Wednesday of 100.8 bcfd this week and 102.3 bcfd next week. The amount of gas flowing to U.S. LNG export plants was on track to rise to 8.4 bcfd on Thursday from 8.3 bcfd on Wednesday, according to preliminary data from Refinitiv.

Week ended Week ended Year ago Five-yearMarch 6 Feb. 28 March 6 average(Actual) (Actual) March 6U.S. natgas storage (bcf): -48 -109 -164

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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 234 237 293 280 278U.S. GFS CDDs 28 26 10 14 11U.S. GFS TDDs 262 263 370 294 289

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 6.6 7.3 8.6 8.5U.S. LNG Imports 0.1 0.1 0.0 0.1 0.2Total U.S. Supply 101.2 100.4 100.9 97.2 85.6

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 3.0 3.0 3.1 2.6U.S. Exports to Mexico 5.6 5.6 5.6 4.8 3.8U.S. LNG Exports 8.1 8.0 8.6 5.1 1.8U.S. Commercial 13.2 10.8 11.5 13.4 12.3U.S. Residential 20.5 16.0 17.4 21.7 19.4U.S. Power Plant 28.7 27.8 27.7 25.1 23.7U.S. Industrial 23.8 23.1 23.3 23.4 22.6U.S. Plant Fuel 4.6 4.6 4.6 4.6 4.7U.S. Pipe Distribution 2.5 2.3 2.3 2.3 2.5U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1Total U.S. Consumption 93.4 84.8 87.0 90.6 85.3Total U.S. Demand 109.9 101.4 104.3 103.6 93.5

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

Hub Current Day Prior DayHenry Hub <NG-W-HH-SNL> 1.96 1.91Transco Z6 New York <NG-CG-NY-SNL> 1.70 1.56PG&E Citygate <NG-CG-PGE-SNL> 2.84 2.62Dominion South <NG-PCN-APP-SNL> 1.52 1.49Chicago Citygate <NG-CG-CH-SNL> 1.77 1.69Algonquin Citygate <NG-CG-BS-SNL> 1.74 1.65SoCal Citygate <NG-SCL-CGT-SNL> 2.40 2.25Waha Hub <NG-WAH-WTX-SNL> 1.15 0.93

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

Hub Current Day Prior DayNew England EL-PK-NPMS-SNL> 21.25 19.00PJM West <EL-PK-PJMW-SNL> 23.00 23.18Ercot North <EL-PK-ERTN-SNL> 29.50 26.00Mid C <EL-PK-MIDC-SNL> 23.75 23.38Palo Verde <EL-PK-PLVD-SNL> 27.75 27.75SP-15 <EL-PK-SP15-SNL> 30.75 32.75

(Reporting by Scott DiSavino; Editing by Bernadette Baum and Alistair Bell)

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