"Natural Gas Trading Picks Up Considerably Amid High Volatility" by Charles Kennedy - ...And is U.S. NatGas Futures dramatically overbought at the $6.35 range?

[Tom Nolan + 2,443]

https://www.yahoo.com/news/bulgaria-industry-tenterhooks-russia-gas-064839047.html

Bulgaria industry on tenterhooks after Russia gas cut

The halt of Russian gas supplies to Bulgaria last week has left companies big and small scrambling as they fear cuts to deliveries and rising prices.

"We are already on the brink. We'll have to raise our prices further," said Valery Krastev, who owns a bread factory in the northern town of Montana.

"How will people pay for this bread?" he worried.

The government has insisted Bulgaria has "alternative choices" to Russian gas and won't reduce supplies to consumers, calling Moscow's move to halt deliveries "blackmail".

While natural gas supplies had escaped punishing European sanctions on Russia over its invasion of Ukraine, Moscow sought to sow division among European nations by exploiting their dependence on its gas.

 

Russia demanded that Gazprom customers have to pay in rubles rather than US dollars or euros, which would be a violation of Western sanctions.

The Russian energy giant cut deliveries to Bulgaria and Poland on April 27.

Since then, Bulgaria's neighbours have stepped in, shoring up deliveries to the country, which has received more than 90 percent of its gas from Russia for decades.

- Diversification -

But the lack of a long-term solution to secure the Balkan EU member's annual needs of about 3.0 billion cubic metres of gas is keeping large industrial consumers as well as smaller businesses on tenterhooks.

Many people living in Sofia still remember January 2009 when a Russia-Ukraine gas spat cut deliveries to Europe for days on end, leaving their homes without heating in the dead of winter and prompting rationing for industry.

So far supplies to Sofia's municipal utility Toplofikacia are uninterrupted, according to its head Alexander Alexandrov.

The utility gets close to 40 percent of all gas in the country to supply 1.5 million people, or a fourth of Bulgaria's population, with heat and hot water.

"We cannot keep operating for more than 24 hours in the event of a complete cut in gas supply," Alexandrov told AFP in an interview, adding that switching back to using fuel oil if gas were cut would have a "grave environmental impact".

"I am optimistic that there are enough options to secure gas by this autumn to guarantee a normal heating season."

Bulgaria already pays 10 percent more for its gas now, Energy Minister Alexander Nikolov confirmed after securing deliveries for May through an intermediary gas trading company.

"I can't believe that someone is trying to convince us that... this is good for us. No it is not," said Konstantin Stamenov, head of the BFIEC federation of industrial energy consumers and a senior executive at a steel manufacturer, on public radio BNR.

To keep prices contained and secure energy supplies, the government has vowed to diversify suppliers.

It plans to wrap up construction of another major pipeline linking its gas network with that of Greece by the end of June.

This will allow the state gas operator Bulgargaz to negotiate an increase of supplies on an existing contract with Azerbaijan to an annual 1.0 bcm and receive more gas from liquefied natural gas (LNG) terminals in Greece.

Prime Minister Kiril Petkov also said that the government is in talks to buy LNG from the United States and Egypt.

Analysts say prices may even fall if the country manages to secure long-term contracts for LNG deliveries.

"We have here a huge opportunity to achieve stable diversification of gas deliveries," energy expert Martin Vladimirov from the Sofia-based think tank Centre for the Study of Democracy told AFP.

However, Open Society economist Georgy Angelov warned: "But that won't happen in a day."

- Business as usual -

For now, it's business as usual at a Bulgartransgaz compressor station near Ihtiman, where Russian natural gas is still flowing through the bright yellow pipes.

But Bulgargaz is no longer allowed to use any of this gas -- most of it being destined for Greece and North Macedonia.

For its own supply, Bulgaria is currently relying on swap operations with its neighbours, who supply it with Russian gas or LNG through reverse flow pipelines from Greece and Romania.

Expert Vladimirov cautioned, however, against a suspected scheme by Russia to abandon its direct contract with Bulgargaz and instead make the country buy gas at higher prices through intermediaries such as Hungarian gas trader MET, known to be close to Gazprom, which already helped secure the deliveries for May.

"This, in the end, might lead to higher dependency on Russia under worse contractual conditions," he warned.

[Tom Nolan + 2,443]

21 hours ago, Piotr Berman said:

The price of NG in Europe (Dutch trading) is about 30 (Euros?) per MWh, and in USA (Henry Hub?), 8 2/3 USD per MM BTU.  This means (if I use converter correctly), ca. 29 USD per MWh.  Seems that at this moment, buying in USA, liquifying, transporting, gasifying and selling would make you loose.  It can be different with long term contracts on either side of Atlantic.

Nevertheless, inflexible US demand and export seem to be at equilibrium, so if I did math correctly, further increasing of LNG export requires demand destruction in USA

 

Here is an answer on Friday May 6th

US natural gas futures fell to $8.4 per million British thermal units after hitting a near fourteen-year high of $8.98 earlier in the session, but is set for a more than 15% jump over the week, with different interpretations over domestic inventory levels driving volatility in the market. The latest EIA report showed a 77 bcf injection into US natural gas storage, which was 9 bcf more than expected, but well within the 5-year average of 78 bcf. Therefore, the gap between current and historical inventory levels remained almost unchanged at 16%, dimming the likelihood of a proper refill ahead of next winter, especially with the risk of an early start to the summer cooling season and soaring overseas demand, mostly in Europe. Prices in Europe are almost triple the price in the US, which is keeping LNG exports running at full capacity, as the region tries to wean off Russian supplies.

https://tradingeconomics.com/commodity/natural-gas

[Tom Nolan + 2,443]

U.S. Natural Gas Prices Could Soon Hit $10

By Tsvetana Paraskova - May 06, 2022, 9:00 AM CDT

Warmer than usual spring weather, expectations of a hotter summer, and record LNG exports to help Europe reduce dependence on Russian gas could send the U.S. benchmark natural gas prices to above $10 per million British thermal units (MMBtu) in the coming weeks, analysts say. 

Earlier this week, the front-month Henry Hub benchmark price hit a 13-year high of over $8/MMBtu, as prices rallied amid increased demand for air conditioning.

As of 9:50 a.m. EST on Friday, the natural gas price was at $8.693/MMBtu, down 1.02% on the day.

Moreover, the levels of natural gas in storage across the United States are well below average for this time of the year. 

The southern U.S. will be very warm to hot with highs of 70s to 90s, including highs near 100°F across Southwest deserts, Texas, and the S. Plains this weekend into the start of next week, according to an estimate from NatGasWeather of natural gas demand. 

“Warmer conditions will spread across the Midwest and eastern US late this weekend into next week with high 60s and 70s,” NatGasWeather notes.  

“Without production making significant gains, the market will not be able to handle things if this kind of heat sticks around,” Bespoke Weather Services says, as carried by Natural Gas Intelligence. 

“If that pans out, we feel we easily can go over $10 in prompt-month [pricing] over the next several weeks, barring massive supply gains,” Bespoke added. 

At the same time, higher demand for heating and record LNG exports left U.S. natural gas in storage at the end of the winter at its lowest level in three years, after larger-than-normal storage withdrawals this past winter, the Energy Information Administration (EIA) said last month. 

The EIA’s latest weekly natural gas report showed that working natural gas stocks totaled 1,567 Bcf in the week to April 29, which is 20% lower than the year-ago level and 16% lower than the five-year (2017–2021) average for this week.  

By Tsvetana Paraskova for Oilprice.com

More Top Reads from Oilprice.com:

• Oil Prices Top $111 As Biden’s SPR Buyback Plan Leaks
• JPMorgan Slashes Demand Outlook Amid Soaring Oil Prices
• U.S. Oil Firms Generate Highest Cash Flows Since 2014

https://oilprice.com/Latest-Energy-News/World-News/US-Natural-Gas-Prices-Could-Soon-Hit-10.html

[Tom Nolan + 2,443]

Southeast Europe’s Search For Natural Gas Supplies

By Eurasianet - May 08, 2022, 12:00 PM CDT

• After Russia stopped gas exports to Bulgaria and Poland in April, countries in Southeast Europe started searching for new suppliers of natural gas. 
• One option is Azerbaijan, with Serbia and Bulgaria both expecting gas to come through the South Gas Corridor and via Greece to replace Russian losses.
• Another option for countries in Southeast Europe is to take advantage of a swap deal between Turkmenistan and Azerbaijan to increase natural gas flows through Turkey.

https://oilprice.com/Energy/Natural-Gas/Southeast-Europes-Search-For-Natural-Gas-Supplies.html

[Tom Nolan + 2,443]

 

[Tom Nolan + 2,443]

West Texas (Odessa) Permian Basin

LNG market growth enormous

https://www.yahoo.com/news/lng-market-growth-enormous-154600845.html

Bob Campbell, Odessa American, Texas - May 7th Saturday

May 7—Liquefied natural gas exports are a relatively new thing in the American energy industry and they are a very big thing that's getting bigger by the day.

Now that nation after nation is shunning Russia as a supplier, the world is crying for the United States, Qatar, Australia, Malaysia and other countries to make up the difference.

The LNG scenario is a complex and extremely high-dollar one, but natural gas is selling for five times its U.S. price in the key markets of India, China, South Korea, Japan and the European Union.

Dustin Meyer, vice president of natural gas markets for the American Petroleum Institute, and Texas Independent Producers & Royalty Owners Association President Ed Longanecker say American LNG exporters are selling all they can ship.

"The Qataris have been exporting it since the early 2000s, but it is a much more recent phenomenon here," Meyer said from Washington, D.C. "We started in 2016 at LNG export terminals that were originally import terminals. Right now, we're exporting around 13 billion cubic feet per day.

"The United States' daily natural gas production is 95 billion cubic feet and LNG is a rising percentage of the overall market. The European demand during this period of conflict between Russia and Ukraine is 40 billion cubic feet per day. Long range, the market is very strong, We also export six billion cf/d via pipeline to Mexico."

While natural gas was selling in the U.S. for $7.84 per thousand cubic feet Wednesday because American production is so great, Meyer said, overseas LNG peaked before Christmas at $65 per mcf and now is going for $35. The domestic natural gas price was only about $3.50 per mcf from 2008 till last year, so the price is much greater here, too.

Having each cost from $10 billion to $20 billion to build and with each one having taken 2 1/2 to four years to complete, only seven export terminals are in operation at Corpus Christi, Freeport, Kenai, Alaska, Hackberry and Sabine, La., Cove Point, Md., and Elba Island, Ga., owned respectively by Cheniere Energy, Freeport LNG Development, Trans-Foreland Pipeline Co., Sempra-Cameron LNG, Cheniere, Berkshire Hathaway-Dominion Energy-Brookfield Asset Management and Kinder Morgan-Global Energy Partners, according to the Federal Energy Regulatory Commission.

Supplied by pipelines, the terminals freeze the natural gas to 260 degrees below zero to liquefy it and then load it onto a monthly average of 100 ships, Meyer said. Weighing 45 percent as much as water, LNG is odorless, colorless, non-toxic and non-corrosive.

When it reaches its destinations, it is thawed out or "regassified," having had the dust, acid gases, helium, water and heavy hydrocarbons removed to make a mixture of mostly methane and a little ethane.

The FERC says export terminals are under construction at Cameron Parish and Plaquemines Parish, La., and Sabine Pass while 12 have been approved but are not yet being built, having survived a three-step application process that takes two years with FERC and the U.S. Department of Energy. "The resources we have in this country are simply enormous." Meyer said.

"It's just a question if we will be allowed to build the pipelines that are necessary to support this buildout."

In January, Longanecker said, the U.S. topped Qatar and Australia as the world's leading exporter of LNG with 354 billion cf. "America has led the world in natural gas production, surpassing Russia and Iran, thanks largely to Texas, which singlehandedly accounts for roughly a quarter of U.S. natural gas production," the TIPRO president said.

"Thanks to our prolific production, in February Europe received nearly 70 percent of all exported U.S. LNG cargoes. More than 85 percent of the additional planned U.S. LNG export capacity will be on the Gulf Coast and it will be largely supplied by Texas natural gas.

"Not only was LNG from the U.S. able to meet European demand in a time of crisis, but U.S. natural gas, when compared to Russian natural gas, is far, far cleaner. Russia's flaring intensity is 143 percent higher than the United States' and 239 percent higher than the Permian Basin's, demonstrating that America produces natural gas in a much more sustainable fashion than other global producers."

Longanecker said the annual global demand for LNG will reach 700 million metric tons, or 28 trillion cf, by 2040, but America's annual exports will only increase by 65 percent and reach 5.86 trillion cf by 2033. "In the near term the Biden administration is pushing for increased LNG exports, but it is not enough," he said.

"To truly promote American energy security and support the expansion of LNG export capacity, the administration must do more. This includes expediting permits for export facilities and pipeline infrastructure and creating a more stable regulatory environment for domestic oil and gas producers to encourage investment in these essential long-term projects."

[Tom Nolan + 2,443]

https://www.fxempire.com/forecasts/article/is-europes-cross-border-infrastructure-prepared-for-handling-more-regasified-lng-992749

Is Europe’s Cross-border Infrastructure Prepared for Handling More Regasified Lng?

By:Yakov Grabar

Published: May 6, 2022,

 

April 2022 saw the second largest monthly number of LNG cargoes delivered to the European terminals, with the continent’s top three importers having received a record total of 6.8 million tons.

 

A substantial increase in imports to the UK, Spain and France has not only provided more volumes to the three countries’ market areas, but also brought much-needed relief to a stretched regional market.

LNG Importers Have Enough Volumes to Share

For many months now, Europe has remained the most attractive destination for spot LNG marketed by producers and trading companies. And this past month was no exception. In April 2022, the total daily average send-out from three British, six Spanish and four French regas facilities increased by about 30pc as compared to the similar period in 2019-2021.

Higher LNG imports drove wider discounts for the prompt products at NBP, PVB and PEG to the neighbouring markets. For instance, the spread between the German day-ahead contract and its French counterpart averaged €11.5/MWh in April versus just over €3/MWh in March. The corresponding NBP product was assessed approximately €30/MWh below the TTF equivalent last month, while in March the price difference between the hubs did not exceed €4.5/MWh on average.

Naturally, this created more export opportunities for shippers active on the LNG receiving markets, which is particularly evident in the UK. Between 1 and 29 April, net exports via the Interconnector and BBL pipelines averaged 65 mcm/d compared with 20 mcm/d in the period from January to March 2022. Had the unplanned maintenance begun on the Interconnector in late April, last month’s flows from the UK to Belgium and the Netherlands might have been even higher.

The influx of LNG supply to Europe could not have come at a better time, given the traditionally volatile weather conditions during the shoulder period and the necessity to fill the region’s low gas stocks.

Limited Infrastructure

At the same time, strong LNG arrivals have highlighted the importance of having adequate cross-border capacity so that volumes are effectively allocated between market areas. Bacton exit capacity limitations and the inability of the Obergailbach-Medelsheim border point and VIP Pirineos to accommodate large flows are raising questions as to whether Europe is well placed to absorb abundant regasified volumes on a regular basis, especially in case of potential additions to LNG import capacity in France and/or Spain.

As the region becomes more dependent on seaborne cargoes, the role played by the exit points like Bacton or VIP Pirineos within the architecture of European gas market continue to evolve. A few years ago regasified LNG that was transported via many of those cross-border connections just complemented pipeline gas imports. In the new reality, easy and timely access to volumes sent from LNG terminals will increasingly define the sustainability of the whole system.

 

The opinions expressed in this blog are mine only and do not reflect the views of my employer.

[Tom Nolan + 2,443]

This Zero Hedge article citing REUTERS seems dated, but it has some good graphs...

https://www.zerohedge.com/commodities/us-gas-prices-soar-europe-and-asia-scramble-lng

US Gas Prices Soar As Europe And Asia Scramble For LNG

by Tyler Durden

Monday, May 09, 2022 - 07:06 AM

By John Kemp, Senior Market Analyst at Reuters

U.S. gas prices have surged to the highest level in real terms since the financial crisis in 2008 as strong demand for LNG from buyers in Europe and Asia puts pressure on inventories. Front-month futures for gas delivered to Henry Hub in Louisiana are trading at almost $9 per million British thermal units, up from just over $3 at the same point last year and less than $3 in 2019.

Front-month futures have surged into a record backwardation of almost $4 above futures for delivery one-year from now, as traders anticipate inventories will remain under pressure through the rest of the year. 

Working gas stocks in underground storage are 335 billion cubic feet or 18% below the pre-pandemic five-year seasonal average for 2015-2019. 

Inventories have remained low despite a fairly mild winter, with population-weighted heating demand this winter in the Lower 48 states around 7% below the average.

Domestic gas production has recovered to its pre-pandemic peak, according to data from the U.S. Energy Information Administration. But exports especially in the form of LNG have risen sharply, which is keeping inventories low and putting upward pressure on prices.

In recent months, LNG exports have been equivalent to 10-12% of domestic dry gas production, up from around 4% in early 2019. Exports have become a big enough share of the market they have started to enforce a partial convergence with prices in Europe and Asia.

U.S. gas supplies have tightened as Europe and Asia scramble to buy LNG to refill their own depleted storage after last winter and amid fears about a disruption of gas supplies from Russia.

The rise in prices will enforce maximum fuel-switching among power generators from gas to coal to conserve fuel stocks this summer, with spot gas now uncompetitive against coal except for peak generation.

More importantly, high prices have started to encourage more gas-focused drilling, which should continue boosting output through the end of the year and into 2023.

The number of rigs targeting gas-rich rock formations has increased to 144, up from only 100 this time last year, according to field services company Baker Hughes.

As the U.S. gas industry becomes more export-focused, drilling rates, inventories and prices are all becoming more responsive to conditions in Europe and Asia.

[Tom Nolan + 2,443]

https://oilprice.com/Energy/Gas-Prices/US-Natural-Gas-Prices-Get-Caught-Up-In-Perfect-Storm.html

U.S. Natural Gas Prices Get Caught Up In Perfect Storm

By Irina Slav - May 09, 2022, 6:00 PM CDT

• U.S. front-month Henry Hub natural gas contracts ended 12% lower on Monday.
• Gas prices have passed the $8 mark last week as a result of soaring exports and strong domestic demand.
• Analysts: ''prices are unsustainably high''.

Join Our Community

U.S. natural gas prices have gone from cheap and range-bound to the highest in more than a decade in a matter of weeks. And they may still have higher to go as extra strong local demand combines with soaring exports to Europe.

Natural gas ended last week at over $8 per million British thermal units. It had started the year at below $4 per mmBtu, and analysts expected it to remain range-bound. But then the war in Ukraine threw all these expectations out of the window.

The United States has been exporting as much natural gas as is physically possible, and more than half of this gas has been going to Europe as it scrambles to reduce its dependence on Russian oil, gas, and coal as quickly as it can.

Yet higher exports of natural gas have meant lower local supply, and this has naturally pushed prices higher. Now, the weather has joined Europe in doing just that.

Reuters noted in a report last week that unusually warm weather in parts of the United States is driving higher than usual demand for natural gas by power utilities as demand for cooling rises. That this fact has coincided with consistently high gas demand from overseas is quite unfortunate. Because normally, gas companies replenish stocks during the spring.

As things stand now, working natural gas in storage in the U.S. as of the last week of April is some 20 percent below last year's level at this time of the year and 16 percent lower than the five-year average for the end of April, according to the Energy Information Administration.

Meanwhile, production has not been too quick to ramp up, CBS News reported last week, citing energy analysts. The pandemic, one of the analysts explained, killed many small gas producers while larger players in the field retrenched to protect their cash, very much like oil companies. Related: Can Washington Regain Influence On The World Stage?

"That decline happened and ran its course just when the global economy started taking off last fall, and we've been whipsawed," David Victor, an innovation and public policy professor from the UC at San Diego, told CBS News. "The demand is back, but supply is taking a while to catch up."

While this happens, demand from exporters of liquefied natural gas is on a steady, strong rise. According to Refinitiv data cited by the Financial Times, this demand has averaged more than 12.3 billion cu ft daily since the start of March. This is 17 percent above what LNG exporters took in last year. For context, it is also almost equal to the total consumption of gas from the U.S. residential sector.

According to some, prices cannot stay where they are for very long. "These prices are unsustainably high," Pavel Molchanov, an analyst with Raymond James, told CBW News. They are "definitely off-the-charts high, and that's not going to persist forever."

The problem with such forecasts is that they make sense theoretically. Yet as we have seen with oil prices, gas prices won't simply collapse under their own weight. A decline in demand would be necessary to do that, and a decline in demand is nowhere on the horizon.

Some buyers of Russian gas in the European Union that have been paying for the commodity in euros or dollars are bracing for a cutoff by Gazprom as their contracts expire, and Russia has switched payments to rubles. If more countries follow the fate of Poland and Bulgaria, the price of gas will rise further, as would demand for alternative gas supplies, even though Poland, for one, continues to receive Russian gas—it just receives it from Germany rather than Russia itself.

Related: Gasoline Prices May Have Finally Peaked

Then there is summer, which is just two months away for the northern hemisphere. Summer, like winter, is a top demand season in that hemisphere, especially in the warmer parts of the United States. What this means is that higher demand for exports will continue hand in hand with higher domestic demand. Gas prices may yet remain off the charts for a while.

Just how strong these tailwinds are was recently demonstrated by French utility Engie. Two years ago, the company suspended talks with NextEra on a long-term LNG supply contract because of emission concerns. Last month, the French utility sealed a 15-year deal with the U.S. LNG exporter.

More than one energy analyst has warned that emission concerns and long-term renewable energy plans in the European Union would act to discourage long-term LNG plans, but this doesn't seem to have been the case so far. That's perhaps the EU's rush to diversify is rather urgent, and not a lot of thought is being put into long-term planning besides the agreement to steady U.S. gas supplies once the EU weans itself off Russian gas. And this will lend long-term support to U.S. gas prices.

By Irina Slav for Oilprice.com

More Top Reads from Oilprice.com:

• China’s COVID Lockdowns Force Aramco To Slash Oil Export Prices
• Saudi Energy Minister: Insufficient Investment To Blame For High Fuel Prices
• China’s COVID Lockdowns Push Copper Prices Lower

[Tom Nolan + 2,443]

Spain and Portugal have the green light from European Commission for their proposal to limit gas prices in Iberia with Spain to present a legal instrument to implement the price cap as soon as Tuesday, according to Reuters.

[Tom Nolan + 2,443]

US natural gas futures slipped below $7.10 per million British thermal units, almost 15% below a fourteen-year high of $8.98 in the previous session, amid some profit taking after temperatures in the south-central region didn’t climb as high as expected. Still, the contract is up roughly 100% so far this year as production remained sluggish amid seasonal maintenance works and unusual Spring freeze-offs and was set for the fifth monthly decline in a row. Meanwhile the consumption of LNG exporting facilities averaged 12.3 bcfd so far in May, up from 12.2 bcfd in April and close to the full capacity level of 13.2 bcfd, boosted by demand in Europe as the region tries to wean off Russian supplies. The combination of late wintry weather, soaring overseas demand and insufficient supplies is offsetting efforts by utilities to inject natural gas into underground storage, which currently sit 17% below the 5-year average.

https://tradingeconomics.com/commodity/natural-gas

[Tom Nolan + 2,443]

Saturday May 7th Bloomberg

https://finance.yahoo.com/news/gazprom-tries-reassure-europe-clients-112603262.html

Gazprom Tries to Reassure Europe Clients They Can Still Buy Gas

(Bloomberg) -- Gazprom PJSC has written to its European clients seeking to reassure them that they can keep paying for gas without breaching sanctions, the latest indication that Russia may be trying to find a way to keep the gas flowing.... [ARTICLE continues]

[Tom Nolan + 2,443]

By:James Hyerczyk

Published: May 9, 2022, 23:38 CDT•2min read

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-rising-output-lower-demand-cap-prices-993603

 

Natural Gas Price Fundamental Daily Forecast – Rising Output, Lower Demand Cap Prices

A surprise jump in output and a change in the weather forecast encouraged speculative longs to take profits.

U.S. natural gas prices tumbled nearly 13% on Monday as a surprise jump in output and a change in the weather forecast encouraged speculative longs to take profits. Traders also cited outside factors as reasons for the long liquidation. These factors included a 6% drop in crude oil prices and a bearish outlook for Chinese energy demand.

Additionally, Reuters reported that European gas stockpiles were filling quickly due to gas flows from Russian pipes and liquefied natural gas (LNG) exports from the United States and elsewhere, stabilizing European prices at around four times U.S. gas futures.

At 04:10 GMT, June natural gas prices are trading $7.059, up $0.033 or +0.47%. On Monday, the United States Natural Gas Fund ETF (UNG) settled at $24.30, down $3.38 or -12.21%.

Short-Term Supply/Demand Outlook

[NARRATIVE FOR A SHORT TERM TREND?]....

Reuters reported that data provider Refinitiv said average gas output in the U.S. Lower 48 states had risen to 94.8 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in November 2021.

On a daily basis, output climbed to 95.9 bcfd on Sunday, its highest since late December.

Refinitiv also projected average U.S. gas demand, including exports, would slide from 90.6 bcfd this week to 89.4 bcfd next week as the weather turns seasonally milder. Those forecasts were similar to Refinitiv’s outlook on Friday.

LNG Flows Steady, but Exports Set to Drop

The amount of gas flowing to U.S. LNG export plants has risen to 12.3 bcfd so far in May from 12.2 bcfd in April. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.2 bcfd of gas into LNG, according to Reuters.

Since the United States will not be able to produce much more LNG anytime soon, it has worked with allies to divert LNG exports from elsewhere to Europe to help EU countries and others break their dependence on Russian gas.

Short-Term Outlook

Although there is an underlying bullish tone in the natural gas market because of long-term demand expectations from Europe, it was a couple of short-term traditional fundamental factors that drove prices lower and could keep a lid on the market over the near-term.

These factors are output and weather demand. For weeks they have been favorable, encouraging long-term traders to add to their already established bullish positions. On Monday, however, conditions changed and the short-term buyers booked profits.

If output continues to rise and heat stays out of the picture then prices are likely to be capped and the market is likely to drift sideways to lower over the near-term. Gas injected into storage is also expected to rise with some forecasting several triple-digit weekly injections as long as temperatures stay close to normal.

For a look at all of today’s economic events, check out our economic calendar.

[Tom Nolan + 2,443]

13 hours ago, Tom Nolan said:

https://oilprice.com/Energy/Gas-Prices/US-Natural-Gas-Prices-Get-Caught-Up-In-Perfect-Storm.html

U.S. Natural Gas Prices Get Caught Up In Perfect Storm

By Irina Slav - May 09, 2022, 6:00 PM CDT

• U.S. front-month Henry Hub natural gas contracts ended 12% lower on Monday.
• Gas prices have passed the $8 mark last week as a result of soaring exports and strong domestic demand.
• Analysts: ''prices are unsustainably high''.

Join Our Community

U.S. natural gas prices have gone from cheap and range-bound to the highest in more than a decade in a matter of weeks. And they may still have higher to go as extra strong local demand combines with soaring exports to Europe.

Natural gas ended last week at over $8 per million British thermal units. It had started the year at below $4 per mmBtu, and analysts expected it to remain range-bound. But then the war in Ukraine threw all these expectations out of the window.

The United States has been exporting as much natural gas as is physically possible, and more than half of this gas has been going to Europe as it scrambles to reduce its dependence on Russian oil, gas, and coal as quickly as it can.

Yet higher exports of natural gas have meant lower local supply, and this has naturally pushed prices higher. Now, the weather has joined Europe in doing just that.

Reuters noted in a report last week that unusually warm weather in parts of the United States is driving higher than usual demand for natural gas by power utilities as demand for cooling rises. That this fact has coincided with consistently high gas demand from overseas is quite unfortunate. Because normally, gas companies replenish stocks during the spring.

As things stand now, working natural gas in storage in the U.S. as of the last week of April is some 20 percent below last year's level at this time of the year and 16 percent lower than the five-year average for the end of April, according to the Energy Information Administration.

Meanwhile, production has not been too quick to ramp up, CBS News reported last week, citing energy analysts. The pandemic, one of the analysts explained, killed many small gas producers while larger players in the field retrenched to protect their cash, very much like oil companies. Related: Can Washington Regain Influence On The World Stage?

"That decline happened and ran its course just when the global economy started taking off last fall, and we've been whipsawed," David Victor, an innovation and public policy professor from the UC at San Diego, told CBS News. "The demand is back, but supply is taking a while to catch up."

While this happens, demand from exporters of liquefied natural gas is on a steady, strong rise. According to Refinitiv data cited by the Financial Times, this demand has averaged more than 12.3 billion cu ft daily since the start of March. This is 17 percent above what LNG exporters took in last year. For context, it is also almost equal to the total consumption of gas from the U.S. residential sector.

According to some, prices cannot stay where they are for very long. "These prices are unsustainably high," Pavel Molchanov, an analyst with Raymond James, told CBW News. They are "definitely off-the-charts high, and that's not going to persist forever."

The problem with such forecasts is that they make sense theoretically. Yet as we have seen with oil prices, gas prices won't simply collapse under their own weight. A decline in demand would be necessary to do that, and a decline in demand is nowhere on the horizon.

Some buyers of Russian gas in the European Union that have been paying for the commodity in euros or dollars are bracing for a cutoff by Gazprom as their contracts expire, and Russia has switched payments to rubles. If more countries follow the fate of Poland and Bulgaria, the price of gas will rise further, as would demand for alternative gas supplies, even though Poland, for one, continues to receive Russian gas—it just receives it from Germany rather than Russia itself.

Related: Gasoline Prices May Have Finally Peaked

Then there is summer, which is just two months away for the northern hemisphere. Summer, like winter, is a top demand season in that hemisphere, especially in the warmer parts of the United States. What this means is that higher demand for exports will continue hand in hand with higher domestic demand. Gas prices may yet remain off the charts for a while.

Just how strong these tailwinds are was recently demonstrated by French utility Engie. Two years ago, the company suspended talks with NextEra on a long-term LNG supply contract because of emission concerns. Last month, the French utility sealed a 15-year deal with the U.S. LNG exporter.

More than one energy analyst has warned that emission concerns and long-term renewable energy plans in the European Union would act to discourage long-term LNG plans, but this doesn't seem to have been the case so far. That's perhaps the EU's rush to diversify is rather urgent, and not a lot of thought is being put into long-term planning besides the agreement to steady U.S. gas supplies once the EU weans itself off Russian gas. And this will lend long-term support to U.S. gas prices.

By Irina Slav for Oilprice.com

More Top Reads from Oilprice.com:

• China’s COVID Lockdowns Force Aramco To Slash Oil Export Prices
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• China’s COVID Lockdowns Push Copper Prices Lower

Yahoo Finance had this featured towards the top of their news feed...

https://finance.yahoo.com/news/u-natural-gas-prices-caught-230000394.html

U.S. Natural Gas Prices Get Caught Up In Perfect Storm

 

[Tom Nolan + 2,443]

https://finance.yahoo.com/news/1-u-natgas-output-demand-170212643.html

REUTERS May 10 Tuesday

UPDATE 1-U.S. natgas output, demand to rise in 2022 -EIA

May 10 (Reuters) - U.S. natural gas production and demand will both rise in 2022 as the economy grows, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO) on Tuesday.

EIA projected that dry gas production will rise to 96.71 billion cubic feet per day (bcfd) in 2022 and 101.71 bcfd in 2023 from a record 93.55 bcfd in 2021.

The agency also projected gas consumption would rise from 82.97 in 2021 to 85.73 bcfd in 2022 before sliding to 85.28 bcfd in 2023. That compares with a record 85.29 bcfd in 2019.

EIA's May supply projection for 2022 was smaller than its April forecast of 97.41 bcfd, but its demand projection was bigger than its April forecast of 84.11 bcfd for 2022.

The agency forecast U.S. liquefied natural gas exports would reach 11.99 bcfd in 2022 and 12.63 bcfd in 2023, up from a record 9.76 bcfd in 2021. That was lower than its April forecast of 12.19 bcfd in 2022.

EIA projected U.S. coal production would rise to 598 million short tons in 2022 and 605 million short tons in 2023 from 578 million short tons in 2021 as power plants burn more coal due to an expected rise in gas prices.

In 2020, coal output fell to 535 million short tons, its lowest since 1965.

EIA projected power generators burning more coal would boost carbon emissions from fossil fuels to 4.959 billion tonnes in 2022 from 4.872 billion tonnes in 2021 before emissions slide to 4.935 billion tonnes in 2023.

That compares with 4.577 billion tonnes in 2020, which was the lowest since 1983 because the coronavirus pandemic depressed demand for energy.

 

[Tom Nolan + 2,443]

As seen on YAHOO FINANCE...   https://finance.yahoo.com/news/top-german-gas-buyer-concedes-140000128.html

https://oilprice.com/Energy/Natural-Gas/Top-German-Gas-Buyer-Concedes-To-Russian-Payment-Scheme.html

Top German Gas Buyer Concedes To Russian Payment Scheme

By Irina Slav - May 10, 2022, 9:00 AM CDT

• VNG opened account with Gazprombank to pay for Russian gas.
• In April, Uniper prepared to switch to payments under Russia's gas-for-rubles scheme.
• The European Commission has lashed out against the new payment terms.

Join Our Community

One of Germany's largest natural gas importers, VNG, has opened an account with Gazprombank for payments for Russian gas under Moscow's new terms.

Per a Reuters report, VNG has said it will transfer the next payment for Russian gas in euros, which will then be converted to rubles in Russia, according to the new gas payment scheme Russia announced in March in response to Western sanctions.

"We will pay the invoice amount, which will continue to be denominated in euros, into the accounts at Gazprombank in accordance with the planned procedure, so that timely payment to our supplier is ensured on our part," VNC told Reuters in a statement.

"We also assume that the conversion into roubles will not cause any difficulties. At least the opening of the account went completely smoothly," the company added.

In April, another top Russian gas buyer from Germany, Uniper, signaled it was preparing to start paying for imports under the new terms dictated by Moscow.

"The plan is to make our payments in euros to an account in Russia," a company spokesperson told German media.

The new terms, devised for what Russia calls unfriendly countries, consist of buyers having to open two accounts in Gazprombank, one of them in euros or dollars and one in rubles. After the buyer deposits payment for gas deliveries in the forex account, the bank converts the sum into rubles and transfers it into the local-currency account, from which the payment is then made.

The European Commission has lashed out against the new payment terms, threatening European gas buyers that if they concede to them, it will violate EU sanctions against Russia.

"Paying roubles through the conversion mechanism managed by the Russian public authorities and a second dedicated account in Gazprombank is a violation of the sanctions and cannot be accepted," Energy Commissioner Kadri Simson said in late April.

By Irina Slav for Oilprice.com

[Tom Nolan + 2,443]

REUTERS Monday May 9

Exclusive-Germany, Qatar at odds over terms in talks on LNG supply deal -sources

https://finance.yahoo.com/news/exclusive-germany-qatar-odds-over-170534190.html

LONDON (Reuters) - Germany and Qatar have hit difficulties in talks over long-term liquefied natural gas (LNG) supply deals amid differences over key conditions, including the duration of any contract, three people familiar with the discussions told Reuters.

Germany, which aims to cut its carbon emissions by 88% by 2040, is reluctant to commit to Qatar's conditions to sign deals of at least 20 years to secure the massive LNG volumes it needs to reduce its dependence on Russian gas, the people said.

Qatar, the world's largest LNG supplier, is also specifying terms such as a destination clause that would prevent Berlin from rerouting the gas to other areas in Europe, a condition which the European Union opposes.

The tough talks between Qatar Energy and German utilities highlight the challenges the EU faces in its ambition to diversify away from Russian gas as the German government struggles to balance any deal with its carbon reduction targets.

Germany consumes around 100 billion cubic meters (bcm) of natural gas annually, with around 55% of that coming from Russia and smaller volumes piped from Netherlands and Norway.

It has backed the construction of two LNG terminals and has rented four floating storage and regasification units (FSRUs) as a stop-gap measure.

What it needs now is the actual LNG.

"The issue of LNG contract length potentially putting Germany's decarbonisation targets at risk is part of the ongoing discussions with Qatar," one of the people said, adding Germany was also competing with other nations for LNG from Qatar.

Another source said that securing LNG supplies form Qatar "is not expected to happen soon".

Qatar's government communication office declined to comment on ongoing negotiations. Germany's Economy Minister was not immediately available for comment.

Qatar is also firm on oil-indexation, linking the contracts to oil price, which represents the pricing structure of their alternative sales into Asia, while the Germans are seeking linkage to the Dutch TTF benchmark, Felix Booth, head of LNG at energy intelligence firm Vortexa, said.

"Qatar is in the driving seat in these discussions, with a new project underway, strong interest in their volumes and a long history as a reliable supplier," Booth said.

"To secure this supply, it is expected that the German team will need to accept a traditional oil linked pricing structure. Leaving the European buyer with significant financial exposure compared to the European hub prices," he added.

QUID PRO QUO

German Economy Minister Robert Habeck in March visited Qatar, along with officials from German utilities RWE and Uniper, to discuss procuring additional volumes but no deal has been agreed so far.

RWE, Germany's largest power producer, in 2016 struck a deal with Qatargas, a unit of Qatar Energy, under which up to 1.1 million tonnes of liquefied natural gas will be delivered to Northwestern Europe annually by the end of 2023.

RWE declined to comment on the talks. Uniper also declined to comment, saying only that its ties with Qatar go back a long way and that it hoped to be able to build on that relationship.

German gas companies will be back to Qatar in May to resume talks, two separate people familiar with the process said.

They said that Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, will visit Germany in the second half of May to sign a partnership agreement between the two countries.

However, this does not mean that long-term LNG deals will be concluded, as the partnership is aimed at paving the way to significantly ramp up long term Qatari LNG deliveries to Germany, they added.

Qatar's sovereign wealth fund, the QIA, has around $20 billion invested in Germany, with stakes in Volkswagen and Deutsche Bank.

Germany hopes for a possible two-way partnership with Qatar where German companies such as Siemens Energy and others could help Doha with its attempts to put into action a sustainability plan it launched late last year.

"There needs to be a gentlemen's agreement between the Qataris and German companies, that LNG should only be the first step in a longer collaboration between the two countries," said one of the people, a German industry source.

(Reporting by Marwa Rashad in London, Andrew Mills in Doha and Christoph Steitz in Frankfurt; Additional reporting by Markus Wacket in Berlin; Editing by Veronica Brown and Alexander Smith

[Tom Nolan + 2,443]

A Russian Gas Halt Would Hit European, North Africa Economies

By Tsvetana Paraskova - May 10, 2022, 11:30 AM CDT

Economies in central and southeastern Europe, the western Balkans, North Africa, and Central Asia could see their post-COVID recovery endangered if Russian gas supply is further disrupted, the European Bank for Reconstruction and Development (EBRD) said in a new report on Tuesday.

The EBRD—which tracks the economies in Central Europe and the Baltic States, Southeastern Europe, Eastern Europe and the Caucasus, Central Asia, the Western Balkans, and the Southern and Eastern Mediterranean—revised down its growth estimates for all those regions in the aftermath of the Russian invasion of Ukraine.

Growth in EBRD-covered countries was revised down to 1.1 percent for 2022, down by 0.6 percentage point compared with forecasts released as recently as late March.

There will be a greater economic slowdown and more inflationary pressure in all those regions as a result of the war on Ukraine, the EBRD said in its latest Regional Economic Prospects report published today.

“All forecasts for this year and next are vulnerable to major downside risks in the event that the scale of the war expands or the flow of exports of gas or other commodities from Russia is more restricted. Should gas supplies be further disrupted, for example, output per capita in the EBRD regions in 2022 could be 2.3 per cent lower than the baseline scenario and 2 per cent lower in 2023,” the bank said.

If gas supply from Russia is disrupted, “The effects would be largest for EU economies with large dependence on gas in their energy mix, such as the Czech Republic, Hungary and the Slovak Republic, where industry may be directly impacted by gas rationing,” the EBRD said.

Russia has already halted natural gas supply to two EU members in

central and southeastern Europe as it insists customers start paying in rubles for its gas. In late April, Gazprom stopped gas deliveries to Poland and Bulgaria, saying supply was cut off “due to absence of payments in rubles.”

By Tsvetana Paraskova for Oilprice.com

More Top Reads from Oilprice.com:

• China’s COVID Lockdowns Force Aramco To Slash Oil Export Prices
• Saudi Energy Minister: Insufficient Investment To Blame For High Fuel Prices
• China’s COVID Lockdowns Push Copper Prices Lower

https://oilprice.com/Latest-Energy-News/World-News/A-Russian-Gas-Halt-Would-Hit-European-North-Africa-Economies.html

[Tom Nolan + 2,443]

Tuesday May 10th before market open

Edited May 10, 2022 by Tom Nolan

[Tom Nolan + 2,443]

Tuesday May 10th near market close -

US natural gas futures bounced back to $7.3 per million British thermal units after briefly hitting a two-week low of $6.4 per million British thermal units, as traders continued to monitor supply and demand prospects amid high volatility. Demand from LNG exporting facilities may further rise on further supply disruptions in Europe after Ukraine's grid operator warned that flows through its Sokhranivka pipeline would stop on Wednesday morning due to disrupting actions from the Kremlin's forces. On the other hand, data showed US output rebounded slightly, averaging 94.3 billion cubic feet a day at the start of the week, up from an average of 93.2 bcfd in the first week of May. Also, the Spring weather could help utilities inject more fuel into storage, which currently sits at 17% below historic levels.

https://tradingeconomics.com/commodity/natural-gas

[Tom Nolan + 2,443]

EU Gas Futures Jump As Ukraine Set To Halt Russian Flows At Key Entry Point

by Tyler Durden

Tuesday, May 10, 2022 - 12:53 PM

Benchmark European natural gas futures jumped as much as 8% Tuesday after it was reported natgas flows into Ukraine at one key entry point from Russia would be halted. There are only two entry points, which means all natgas would be diverted to the second entry point. 

Ukraine's Gas Transmission System Operator said it would no longer accept Russian gas transit via Sokhranivka beginning at 0700 local time on Wednesday. Mainly because it "repeatedly informed Gazprom about threats of transit due to the actions of the Russian-controlled occupation forces and demanded an end to interference in the operation of the facilities, but these appeals were ignored." ....

https://www.zerohedge.com/commodities/eu-gas-futures-jump-ukraines-grid-operator-halt-flows-key-entry-point

[Tom Nolan + 2,443]

Tuesday May 10 in Europe

EU natural gas futures traded higher in the afternoon, nearing the €100 per megawatt-hour mark after hitting an intra-day low of €89.75, following warnings of supply disruptions in Ukraine.

The country's grid operator said the Sokhranivka entry point would halt flows on Wednesday, as invading troops disrupted operations at the compressor station.

Earlier, concerns over Russian supplies had calmed after reports that Gazprom had communicated to its clients about a new order issued by the Kremlin to clarify the uncertainty over the demand for payments in rubles. Adding to downside pressures, weather forecasts point to warm weather during the fortnight ahead, while imports of LNG remained ample.

Regasification terminals in the continent have been filling up with the ultra-chilled fuel and some operated above their planned capacity in the previous week.

https://tradingeconomics.com/commodity/eu-natural-gas

[Tom Nolan + 2,443]

Natural Gas Price Fundamental Daily Forecast – Outlook for More Weather-Related Demand Driving Prices Higher

By:James Hyerczyk

Updated: May 11, 2022, 06:40 CDT•3min read

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-outlook-for-more-weather-related-demand-driving-prices-higher-996622

 

The EIA on Tuesday forecasted that Henry Hub spot prices will spike to $8.59/MMBtu on average in the second half of this year.

Natural gas futures are moving higher early Wednesday as traders continue to claw back Monday’s steep loss. Yesterday, the U.S. market recovered about 2% after plunging 20% over the prior two sessions, on a preliminary drop in daily output and forecasts for more demand next week than previously expected.

At 11:10 GMT, June natural gas futures are trading $7.483, up 0.098 or 1.33%. On Tuesday, the United States Natural Gas Fund ETF (UNG) settled at $24.80, up $0.49 or +2.02%

According to Reuters, “Traders noted that increase in U.S. prices came even though gas futures were sliding in Europe as stockpiles there fill fast as Russia keeps supplying gas via pipeline and relatively high prices continue to attract liquefied natural gas (LNG) from the United States and elsewhere.”

Russia is likely acting quickly to sell as much gas it can to Europe before the European Commission decides to embargo Russian energy products.

Refinitiv Supply/Demand Numbers

Data provider Refinitiv said average gas output in the U.S. Lower 48 states has climbed to 94.8 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in November 2021.

On a daily basis, however, output was on track to drop about 2.0 bcfd to near a two-week preliminary low of 93.7 bcfd on Tuesday due mostly to declines in Texas. That will be the biggest daily decline in overall output since early February.

Short-Term Weather Outlook

According to NatGasWeather for May 11-17, “It remains very warm to hot over Texas and the Southern Plains with highs of 80s and 90s, while the West into the Northern Plains remains mild & unsettled as weather systems track through.

The East will be nice despite a stalled weather system off the coast that will eventually track into the Southeast later in the week.

It will also be warm from the Southern Great Lakes to the South as high pressure rules and results in highs of 80s to lower 90s.

For late this week through mid-next week, the northern U.S. will be comfortable with highs of 60s and 70s, while the southern U.S. remains very warm with highs of 80s and 90s, besides hotter 100s in the Southwest deserts.”

Daily Forecast

According to Natural Gas Intelligence (NGI), “A new catalyst emerged on that front Tuesday, when Gas TSO of Ukraine (GTSOU) reported a force majeure affecting key hubs in Ukraine through which Russian gas flows to Europe. GTSOU blamed disruptions caused by Russian military forces.” This news should keep the market underpinned, which is probably why traders continue to buy the dips.

In another bullish development, the U.S. Energy Information Administration on Tuesday forecasted that with storage levels expected to lag behind the five-year average this summer, Henry Hub spot prices will spike to $8.59/MMBtu on average in the second half of this year.

Technically, June natural gas futures found support inside a retracement zone at $6.779 to $6.256 so we can call the Friday – Monday weakness a normal 50% to 61.8% correction.

The next upside target zone is $7.713 to $8.016. Sellers could come in on the first test of this area, but overcoming $8.016 could trigger an acceleration into $8.996 or higher.

For a look at all of today’s economic events, check out our economic calendar.

[Tom Nolan + 2,443]

Europe May Face LNG Crisis This Winter

by Tyler Durden

Wednesday, May 11, 2022 - 04:00 AM

Via Rystad Energy,

• Rush to wean off Russian gas has made European consumers highly vulnerable to LNG price shocks.

• Global LNG demand outstrips supply in 2022.

• New LNG projects are unlikely to provide relief until 2024.

A liquified natural gas (LNG) crisis is brewing for European countries dealing with energy insecurity in the wake of Russia’s invasion of Ukraine, as demand will outstrip supply by the end of this year, Rystad Energy research shows. Although soaring demand has spurred the greatest rush of new LNG projects worldwide in more than a decade, construction timelines mean material relief is unlikely only after 2024. Global LNG demand is expected to hit 436 million tonnes in 2022, outpacing the available supply of just 410 million tonnes. A perfect winter storm may be forming for Europe as the continent seeks to limit Russian gas flows. The supply imbalance and high prices will set the scene for the most bullish environment for LNG projects in more than a decade, although supply from these projects will only arrive and provide relief from after 2024.

https://www.zerohedge.com/energy/europe-may-face-lng-crisis-winter

[Tom Nolan + 2,443]

Wednesday May 11th - EU natural gas futures were flat near the €100 per megawatt-hour mark, as traders continued to assess supply disruptions in Ukraine. The country's grid operator declared force majeure and halted flows at its Sokhranivka entry point, responsible for roughly one-third of volumes transiting Ukraine, saying it can’t control infrastructure in occupied territories. Meanwhile, new Kremlin orders meant to clarify the uncertainty over the demand for payments in rubles had calmed some concerns over Russian supplies, as payment deadlines loomed. Adding to downside pressures, weather forecasts point to warm weather, while imports of LNG remained ample. Regasification terminals in the continent have been filling up with the ultra-chilled fuel and some operated above their planned capacity in the previous week.

https://tradingeconomics.com/commodity/eu-natural-gas