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U.S. natgas futures jump to 7-year high on Europe supply fears

U.S. natural gas futures jumped over 7% to a fresh seven-year high as worries that Europe will not have enough gas in storage for the winter heating season boosted global prices to record levels and kept demand for U.S. liquefied natural gas exports strong.

U.S. prices rose despite weeks of mild weather in the United States that has allowed utilities to inject more gas into stockpiles than usual for this time of year.

The U.S. Energy Information Administration said utilities added a bigger-than-usual 88 billion cubic feet of gas into storage during the week ended Sept. 24. That was a little over the 87-bcf build analysts forecast in a Reuters poll and compares with an increase of 74 bcf in the same week last year and a five-year (2016-2020) average increase of 72 bcf. [EIA/GAS]

Last week’s injection boosted stockpiles to 3.170 trillion cubic feet, or 6.3% below the five-year average of 3.383 tcf for this time of year.

Looking ahead, analysts expect U.S. inventories to reach about 3.5 tcf at the start of the winter heating season in November, which they said would be a comfortable level even though it falls short of the 3.7 tcf five-year average for that time of year. That is nowhere near as dire as in Europe where analysts say gas storage is over 20% below normal in some countries.

“The contrast between short-term ample U.S. balances and long-term bullish supply/usage elsewhere around the globe … is creating much of the recent extreme volatility,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Front-month gas futures for November delivery rose 39.0 cents, or 7.1%, to settle at $5.867 per million British thermal units (mmBtu), their highest close since February 2014.

Earlier this week, gas prices closed up 11% to their highest since February 2014 on Monday and dropped 6% on Wednesday. Traders said price swings were amplified by speculative trading around the expiration of the October future on Tuesday.

For the month, the front-month was up about 34%, its highest since August 2020. That puts the contract on track to rise for a sixth month in a row for the first time since hitting a record seven months in June 2008. During those six months, the contract has soared 89%.

With gas prices at or near record highs of around $32 per mmBtu in Europe and $30 in Asia versus just about $6 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States could produce.

Despite reductions at several plants this month, data provider Refinitiv said the amount of gas flowing to U.S. LNG export plants has slipped modestly to an average of 10.4 billion cubic feet per day so far in September from 10.5 bcfd in August.

But no matter how high global prices rise, the United States only has the capacity to turn about 10.5 bcfd of gas into LNG. Global markets will have to wait until later this year to get more from the United States when the sixth liquefaction train at Cheniere Energy Inc’s Sabine Pass and Venture Global LNG’s Calcasieu Pass in Louisiana are expected to start producing LNG in test mode.

Week ended Week ended Year ago Five-year

Sep 24 Sep 17 Sep 24 average

(Actual) (Actual) Sep 24

U.S. weekly natgas storage change (bcf): 88 76 74 72

U.S. total natgas in storage (bcf): 3,170 3,082 3,745 3,383

U.S. total storage versus 5-year average -6.3% -6.9%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2020 (2016-2020)
Henry Hub 5.64 5.78 2.28 2.13 2.66

Title Transfer Facility (TTF) 31.56 27.98 3.94 3.24 5.19

Japan Korea Marker (JKM) 30.01 29.35 4.63 4.22 6.49

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 37 39 61 74 91

U.S. GFS CDDs 79 79 76 75 64

U.S. GFS TDDs 116 118 137 151 155

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For


U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 91.8 91.5 91.8 88.4 82.6

U.S. Imports from Canada 7.2 7.4 7.0 6.6 7.6

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 99.0 98.9 98.7 95.0 90.3

U.S. Demand (bcfd)

U.S. Exports to Canada 2.4 2.0 2.0 2.2 2.3

U.S. Exports to Mexico 5.8 5.6 5.8 6.1 5.0

U.S. LNG Exports 9.9 10.4 10.5 6.8 3.1

U.S. Commercial 4.9 5.0 5.0 5.6 4.8

U.S. Residential 4.1 4.3 4.3 5.4 3.8

U.S. Power Plant 31.4 28.3 28.9 30.5 32.8

U.S. Industrial 21.0 20.9 20.9 22.0 21.1

U.S. Plant Fuel 4.5 4.5 4.5 4.5 4.4

U.S. Pipe Distribution 1.8 1.7 1.7 1.7 1.9

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 67.9 64.9 65.5 69.8 68.9

Total U.S. Demand 86.0 82.8 83.8 84.9 79.3

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

Hub Current Day Prior Day

Henry Hub 5.73 5.94

Transco Z6 New York 4.69 4.69

PG&E Citygate 7.04 7.26

Dominion South 4.66 4.75

Chicago Citygate 5.30 5.44

Algonquin Citygate 4.92 4.86

SoCal Citygate 7.12 7.33

Waha Hub 5.14 5.45

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

Hub Current Day Prior Day

New England 50.25 48.00

PJM West 51.25 51.00

Ercot North 54.50 53.25

Mid C 65.33 65.56

Palo Verde 60.50 61.00

SP-15 62.25 60.00
Source: Reuters (Reporting by Scott DiSavino; Editing by Kirsten Donovan, Nick Zieminski and Mark Porter)

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