June 23, 2022

U.S. Nat Gas Futures Climb 8% on Rising LNG, Power Consumption

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U.S. natural gas futures jumped about 8% to a nearly 13-year high on Monday as electricity

generators and liquefied natural gas (LNG) export plants consumed more fuel.

Electricity and gas prices soared last week as homes and businesses turned up their air conditioners to escape

a spring heat wave. To keep the lights on, generators burned more gas to produce electricity.

Also, there is usually less wind when it is extremely hot. This means that the generators must burn even

more gas to make up for lost wind power. Wind generated around 12% of the country’s electricity last week, down

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by no less than 16% in recent weeks, while gas produced around 37%, compared to only 33% in recent weeks.

First-month U.S. gas futures for June delivery rose 66.1 cents, or 8.2%, to $8.744 per month.

million British thermal units (mmBtu), the highest since closing at a 13-year high of $8,783 on May 5.

With Monday’s gain, U.S. gas futures are up around 135% year-to-date, the global rise

prices have kept demand for US LNG exports high since Russia’s invasion of Ukraine on Feb. 24.

Gas was trading around $27 per mmBtu in Europe and $22 in Asia.

US futures are lagging far behind world prices because the US is the world’s largest producer, with all

the gas it needs for domestic use while capacity constraints are holding back LNG exports.

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Data provider Refinitiv said average gas production in the lower 48 US states had climbed to 95.0 billion cubic

feet per day (bcfd) so far in May versus 94.5 bcfd in April. This compares to a monthly high of 96.1 bcfd in

November 2021.

Refinitiv forecast average U.S. gas demand, including exports, to drop from 89.4 billion cubic feet per day this week to

88.0 bcfd next week. That forecast was lower than Refinitiv’s forecast on Friday.

The average amount of gas delivered to LNG export plants in the United States rose to 12.4 billion cubic feet per day in May, from 12.2

bcfd in April. It reached a monthly high of 12.9 bcfd in March. The United States can turn around 13.2 bcfd of

gas to LNG.

On a daily basis, LNG feed gas was on track to hit a seven-week high of 13.3 bcfd on Monday.

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Since the United States will not be able to produce much more LNG soon, it has worked with allies to divert

exports from elsewhere to Europe to help European Union (EU) countries and others break their dependence on

Russian gas after the Russian invasion of Ukraine.

Russia exported about 7.4 billion cubic feet a day of gas to Europe on Sunday, down from about 7.5 on Saturday, in the three

main lines to Germany: North Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the

Route Russia-Ukraine-Slovakia-Czech Republic-Germany. This compares to an average of 11.9 bcfd in May 2021.

Gas stocks in North West Europe – Belgium, France, Germany and the Netherlands – have been

about 11% below the five-year average (2017-2021) for this time of year, compared to 39% below the five-year average

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standard in mid-March, according to Refinitiv. Storage was currently around 39% of total capacity.

That’s healthier than U.S. stocks, which were about 15% below their five-year norm, and has helped

to drop European futures to their lowest level since February 22 on Monday – two days before Russia

invades Ukraine.

Weekend Weekend One year ago Five years

May 20 May 13 May 20 average

(Forecast) (Actual) May 20

US Nat Gas Storage Weekly Change (bcf): +95 +89 +109 +97

Total nat gas in storage in the United States (bcf): 1,827 1,732 2,199 2,139

Total US storage vs. 5-year average -14.6% -15.2%

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

Average last year Average

2021 (2017-2021)

Henry Hub 7.96 8.08 2.96 3.73 2.89

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Securities Transfer Facility (TTF) 26.45 26.99 8.88 16.04 7.49

Japan Korea Marker (JKM) 21.83 21.79 9.65 18.00 8.95

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Total two-week forecast Current day Previous day Previous year 10 years 30 years

Standard Standard

US GFS Hard Drives 31 36 34 31 38

DC US GFS 119 128 90 98 110

United States GFS TDD 150 164 124 129 148

Refinitiv’s Weekly US GFS Supply and Demand Forecast

Previous week Current week Next week This week Five years

Last year’s average for

Month

US Supply (bcfd)

Lower 48 US dry production 95.1 95.6 96.0 92.5 83.9

US imports from Canada 7.6 7.6 7.7 7.3 7.6

US LNG imports 0.0 0.0 0.0 0.0 0.1

Total US supply 102.7 103.2 103.7 99.8 92.6

US demand (bcfd)

US exports to Canada 2.8 2.6 2.7 2.1 2.1

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US exports to Mexico 6.1 6.0 6.1 6.2 4.8

US LNG exports 12.2 13.2 12.9 10.5 5.1

Commercial in the United States 5.0 5.1 4.7 5.0 5.6

US residential 4.8 4.8 4.1 4.8 6.7

US power plant 31.4 30.1 30.2 27.6 26.0

US industry 20.7 20.9 20.7 21.4 20.9

US vegetable fuel 4.7 4.7 4.7 4.7 4.6

Distribution of pipes in the United States 1.8 1.8 1.8 1.8 1.8

Fuel for US vehicles 0.1 0.1 0.1 0.1 0.1

Total US consumption 68.5 67.6 66.3 65.4 65.7

Total US demand 89.6 89.4 88.0 84.2 77.7

Percentage of US Weekly Electricity Generation by Fuel – EIA

Weekend Weekend Weekend Weekend Weekend

May 27 May 20 May 13 May 6 April 29

Wind 12 12 15 13 16

Solar 4 4 4 4 4

Hydroelectricity 7 7 7 7 7

Other 2 2 2 2 2

Oil 0 0 0 0 0

Natural gas 36 37 34 36 33

Coal 20 20 18 19 19

Nuclear 19 19 19 20 19

SNL Next Day US Natural Gas Price ($ per mmBtu)

Hub Current day Previous day

Henry Hub 7.97 8.21

Transco Z6 New York 7.92 7.82

PG&E City Gate 9.55 9.78

Dominion South 7.43 7.62

Chicago city gate 7.80 7.93

Algonquin City Gate 8.65 7.94

SoCal City Gate 7.78 8.19

Waha Center 7.25 7.33

AECO 4.61 4.58

SNL US Power Next-Day price ($ per megawatt-hour)

Hub Current Day

New England 120.50 70.00

PJM West 116.75 153.50

Ercot North 76.00 80.00

Middle C 25.00 18.25

Palo Green 41.75 37.50

SP-15 43.50 51.25

(Reporting by Scott DiSavino; Editing by David Gregorio and Nick Zieminski)

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