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US premium of January gas futures over February hits record high

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US oil-to-gas futures ratio falls to lowest since January 2023

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US LNG export feedgas on track to decline in 2024

(Adds latest prices)

By Scott DiSavino

Dec 20 (Reuters) - U.S. natural gas futures jumped about 5% to a 23-month high on Friday on early forecasts for much colder

weather in mid-January that could freeze oil and gas wells and lift spot prices by reducing output as in past years.

Also supporting prices was an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants and

forecasts for slightly cooler weather than previously expected that should boost heating demand next week.

Front-month gas futures for January delivery on the New York Mercantile Exchange rose 16.4 cents, or 4.6%, to settle

at $3.748 per million British thermal units (mmBtu), their highest close since January 2023 for a second day in a row.

With the front-month up about 16% over the past four days and in technically overbought territory for the first time since

November, the premium of futures for January over February climbed to a record high of 34 cents per mmBtu.

For the week, the contract was up about 14% after gaining 7% last week.

Recent increases in gas prices coupled with a decline in oil prices, but the oil-to-gas ratio, or the level at which oil

trades compared with gas, to 19-to-1 on Friday, the lowest since January 2023. On an energy equivalent basis, oil should only trade

six times over gas.

So far in 2024, crude prices have traded about 34 times over gas. That compares with 30 times over gas in 2023 and 20 times over

gas during the prior five years (2018-2022).

In other news, U.S. President-elect Donald Trump said the European Union, already the biggest buyer of U.S. energy, should step

up U.S. oil and gas imports or face tariffs on the bloc's exports.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 103.1 billion cubic feet per day (bcfd) so far

in December, up from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.

Meteorologists projected weather in the Lower 48 would remain mostly warmer than normal through at least Jan. 4.

LSEG forecast average gas demand in the Lower 48, including exports, would rise from 124.4 bcfd this week to 130.2 bcfd with

cooler weather next week before falling to 119.4 bcfd with milder weather in two weeks. The forecast for next week was higher than

LSEG's outlook on Thursday.

The use of gas to produce LNG for export - the fastest growing source of U.S. gas demand growth in recent years - was headed for

its first annual decline in 2024 since the country started exporting the super-chilled fuel from the Lower 48 states in 2016.

The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 14.1 bcfd so far in December, up from

13.6 bcfd in November. That compares with a monthly record high of 14.7 bcfd in December 2023.

On a daily basis, a drop in LNG feedgas to Cheniere Energy's 2.4-bcfd Corpus Christi plant in Texas to a three-month low

of 1.6 bcfd offset a rise in flows to Cheniere's 4.5-bcfd Sabine Pass in Louisiana to an eight-month high of 5.2 bcfd and a rise in

flows at Venture Global LNG's 2.6-bcfd Plaquemines plant under construction in Louisiana to a record 0.4 bcfd this week.

Week ended Week ended Year ago Five-year

Dec 20 Dec 13 Dec 20 average

Forecast Actual Dec 20

U.S. weekly natgas storage change (bcf): -97 -125 -87 -127

U.S. total natgas in storage (bcf): 3,525 3,622 3,515 3,363

U.S. total storage versus 5-year average 4.8% 3.8%

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

Last Year Average Average

2023 (2018-2022)

Henry Hub 3.67 3.58 2.54 2.66 3.60

Title Transfer Facility (TTF) 13.27 13.14 11.55 13.04 14.39

Japan Korea Marker (JKM) 13.46 13.01 14.03 14.39 14.31

LSEG 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 352 336 314 402 427

U.S. GFS CDDs 3 5 3 5 4

U.S. GFS TDDs 355 341 317 407 431

LSEG U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Next Week This Week Five-Year

Week Last Year (2019-2023)

Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 103.2 103.4 102.8 105.6 97.8

U.S. Imports from Canada 9.8 9.5 9.8 N/A 8.7

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.2

Total U.S. Supply 113.0 112.9 112.6 N/A 106.7

U.S. Demand (bcfd)

U.S. Exports to Canada 3.0 3.5 3.5 N/A 3.4

U.S. Exports to Mexico 5.7 5.8 5.8 N/A 5.4

U.S. LNG Exports 13.6 14.0 14.6 14.7 10.8

U.S. Commercial 15.4 14.4 16.1 13.8 14.3

U.S. Residential 25.5 23.3 26.4 22.0 23.4

U.S. Power Plant 33.2 30.8 30.5 35.1 30.3

U.S. Industrial 25.2 24.7 25.3 24.7 25.1

U.S. Plant Fuel 5.1 5.1 5.1 5.1 5.2

U.S. Pipe Distribution 2.9 2.7 2.8 2.8 3.7

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

Total U.S. Consumption 107.4 101.2 106.3 103.6 102.1

Total U.S. Demand 129.8 124.4 130.2 N/A 121.7

N/A is Not Available

U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam 2025 2025 2024 2003 2022

Current Day Prior Day % of Normal % of Normal % of Normal

% of Normal % of Normal Actual Actual Actual

Forecast Forecast

Apr-Sep 92 94 74 83 107

Jan-Jul 90 91 76 77 102

Oct-Sep 91 91 77 76 103

U.S. weekly power generation percent by fuel - EIA

Week ended Week ended 2023 2022 2021

Dec 20 Dec 13

Wind 13 13 10 11 10

Solar 3 3 4 3 3

Hydro 6 5 6 6 7

Other 1 1 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 39 39 41 38 37

Coal 17 18 17 21 23

Nuclear 21 20 19 19 20

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

Hub Current Day Prior Day

Henry Hub 3.15 3.01

Transco Z6 New York 3.31 3.08

PG&E Citygate 3.45 3.65

Eastern Gas (old Dominion South) 2.81 2.81

Chicago Citygate 2.92 3.13

Algonquin Citygate 10.63 4.65

SoCal Citygate 3.61 3.69

Waha Hub 2.79 2.73

AECO 1.20 1.18

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

Hub Current Day Prior Day

New England 53.50

PJM West 35.50

Ercot North 27.88

Mid C 36.83

Palo Verde 45.00

SP-15 45.25