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US Natural Gas Stabilizes as Mild US Weather Offsets Strong Global Demand for LNG

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US natural gas futures were flat for the second day in a row on Friday according to forecasts

mild weather and low demand for heating until the end of October offset expectations that insatiable global demand

because the fuel would keep America’s liquefied natural gas (LNG) strong.

Traders also noted that the growing belief that the United States will have enough gas in storage for the

winter after four weeks of larger-than-usual storage accumulations and a lack of capacity to produce more LNG for

the export has prevented US prices from skyrocketing to the sky-high levels seen in Europe and Asia.

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Furthermore, with the increase in gas production from the US and heating demand is expected to remain low for the remainder of the period.

month, traders noted that US utilities should be able to continue to store more gas than usual for weeks

come.

Looking ahead, analysts expect US inventories to exceed 3.5 trillion cubic feet by the start of the winter heating season.

in November, they said it would be a comfortable level despite the fact that it does not reach 3.7 tcf in five years

average. That’s not as terrible as in Europe, where analysts say gas storage is more than 20% below normal in

some countries.

But pipeline constraints and competition for expensive LNG were expected to drive multi-year prices.

highs in California and New England this winter.

First month gas futures fell 1.1 cents, or 0.2%, to $ 5,666 per million British thermal units.

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(mmBtu) at 8:33 am EDT (1233 GMT).

In an extremely volatile trading week, the contract was on track to rise less than 1%, which

post it for the seventh week in a row for the first time since December 2013. Earlier this week, the

the previous month soared more than 9% to a 12-year high on Tuesday and collapsed more than 10% on Wednesday.

Weeks of rapid changes in US gas futures pushed implied volatility to an all-time high

earlier this week. The market uses implied volatility to estimate possible price changes in the future.

Data provider Refinitiv said gas production in the lower 48 US states increased to an average of $ 92 billion.

cubic feet per day (bcfd) so far in October from 91.1 bcfd in September. That compares to a monthly record

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of 95.4 bcfd in November 2019.

Projected average US gas demand in a refined manner, including exports, is expected to slide from 86.1 bcfd this week to

84.8 bcfd below, as the weather turns milder before rising to 85.1 bcfd in two weeks as more homes and

companies start lighting their heaters. Those forecasts were similar to what Refinitive expected in

Thursday.

With gasoline prices close to $ 32 per mmBtu in Europe and $ 33 in Asia, compared to less than $ 6 in the

United States, traders said buyers around the world should continue to buy all the LNG that the United States could

Produces.

Refinitiv said the amount of gas flowing to U.S. LNG export plants dropped from an average of 10.4 bcfd in

September to 10.0 bcfd so far in October due to short-term disturbances at some Gulf Coast plants and ongoing

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planned maintenance at Berkshire Hathaway Energy’s Cove Point LNG export plant in Maryland.

Traders noted that the work at Cove Point was expected to last approximately three weeks, meaning it could return to

service early next week.

But no matter how high global prices rise, the United States only has the capacity to convert about 10.5 bcfd of

gas in LNG. Global markets will have to wait until the end of 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 is expected to begin producing LNG in trial mode.

Week ended Week ended One year ago Five years

October 8 October 1 October 8 Average

(Forecast) (Actual) October 8

Weekly US Natural Gas Storage Change (Bcf): 95 118 50 79

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Total natural gas stored in the US (Bcf): 3,383 3,288 3,870 3,543

Total US Storage Versus 5-Year Average -4.5% -5.1%

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

Last year’s average

2020 (2016-2020)

Henry Hub 5.73 5.52 2.84 2.13 2.66

Title Transfer Service (TTF) 31.67 34.55 4.89 3.24 5.19

Japan Korea Scoreboard (JKM) 33.08 34.05 5.97 4.22 6.49

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

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

Norm norm

US GFS Hard Drives 73 69 61741122

US ITC CDD 59 66 76 75 47

US GFS TDD 132 135 137 151 169

Weekly US GFS Supply and Demand Forecasts

Previous week Current week Next week This week Five years

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Last year’s average for

Month

US supply (Bcfd)

Dry production of the 48 low countries of the USA 91.8 92.0 92.0 87.0 83.1

United States imports from Canada 7.6 7.4 7.4 7.2 7.5

US LNG imports 0.0 0.0 0.0 0.0 0.1

Total US supply 99.5 99.4 99.4 94.2 90.7

US demand (Bcfd)

US exports to Canada 2.0 2.1 2.3 2.2 2.0

Exports from the United States to Mexico 5.7 5.6 5.8 6.0 5.0

US LNG exports 10.3 9.9 10.6 7.3 3.7

US Commercial 5.0 5.0 5.4 5.8 6.8

US Residential 4.3 4.3 5.3 5.9 7.2

US power plant 28.4 32.0 28.3 31.4 27.7

US Industry 20.7 20.6 20.8 22.0 21.6

US vegetable fuel 4.5 4.5 4.5 4.5 4.5

Pipeline distribution in the US 1.7 1.8 1.8 1.8 1.7

US Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total US consumption 64.8 68.4 66.1 71.5 69.6

Total US demand 82.8 86.1 84.8 87.0 80.3

SNL Overnight US Natural Gas Prices ($ Per mmBtu)

Hub Current day Previous day

Henry Hub 5.71 6.00

Transco Z6 New York 4.73 5.21

PG&E Citygate 7.01 7.23

Dominion South 4.70 5.11

Chicago Citygate 5.42 5.74

Algonquin citygate 5.04 5.33

SoCal Citygate 6.54 6.76

Waha Hub 5.41 5.47

SNL US Power Overnight Prices ($ per megawatt-hour)

Hub Current day Previous day

New England 67.25 69.75

PJM West 57.25 62.50

Ercot north 59.17 58.70

Mid C 62.00 77.50

Green stick 57.25 65.50

SP-15 58.75 66.00

(Reporting by Scott DiSavino; Editing by Kirsten Donovan)

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