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Maguire: U.S. Natural Gas Markets Point to a Sharp Price Rise in 2025
Although the northern hemisphere's summer is not officially over, US natural gas markets have already begun to assess supply and demand for this winter and next year. This suggests that prices could rise sharply. Data from LSEG show that forward markets for Henry Hub Futures, the benchmark U.S. Natural Gas price, predict an average price of $3.20 per Million British Thermal Units (mmBtu), compared to a $2.22 average so far this season. This would be the largest annual price hike since 2022. It could also worsen the inflationary trends for energy products despite the slowdown of broader price increases in the United States. MOOD SWING The bullish outlook on forward markets contrasts with the relatively downbeat mood so far in U.S. Gas markets in 2024. U.S. Futures fell to 4-year lows as major storage hubs emerged with large stockpiles from the winter after mild temperatures cut down on gas usage for heating during the traditionally coldest month of the year. Since then, inventory levels have remained 10% above long-term average and limited price growth throughout the summer despite a higher demand for cooling system that increased national gas consumption during July and August. Prices fell around 3% Monday, as traders expected that a storm predicted to hit Louisiana this week would reduce gas demand due to power outages. LNG export plants were also expected not use as much gas. Gas demand centers will be further disrupted by additional storms that may occur off the coast of Louisiana this fall, even though gas supply hubs in the inland region continue to run at near-record levels. According to LSEG, the average U.S. production of dry gas reached a record 102.5 billion cubic foot per day (Bcf/d) in the first eight month of 2024. This total is up 9.5% over the average daily production rate between 2020 and 2022. According to the United States Energy Information Administration, in 2025 production will reach a record high of 105 Bcf/d. DEMAND DRIVERS The use of gas is set to increase in the future. The main drivers for U.S. gas consumption are power production, industrial processes, and LNG exports. According to the EIA, around 38% is consumed by the power sector, and an additional 32% by industry. According to the Institute for Energy Economics & Financial Analysis, LNG exports account for 10% more. Power and industrial demand are primed to grow in 2025, and beyond. Total national electricity consumption is on the rise and so is production of manufactured goods and chemical products. The use of gas in U.S. electricity generation will likely increase over the next decade, as coal-fired power units are replaced with gas-fired ones that emit 77% less CO2 per unit of energy than coal plants. As new terminals ramp up their operations, and take advantage of the growing demand for natural gas around the world, U.S. exports of LNG are also expected to reach new records. According to LSEG, the volumes of U.S. Natural Gas consumed by LNG Exporters (known as feedgas) are expected to increase from 13 Bcf/d at present to 17 Bcf/d at the end of 2025. PRICE SUPPORT Vs PRICE PAIN The 31% increase in the use of gas by the LNG export sector will help to tighten up the U.S. natural gas supply, just as the use of gas in power generation is also expected to rise. As a result, the price trend is set to increase, as reflected by the upward-sloping curve of the U.S. Natural Gas market. Gas prices that are higher should also spur a response in the supply and encourage producers to increase output. High gas prices can also reduce consumer demand. This is especially true for the cost-conscious industry sector, which could electrify some processes if gas costs are too high. Gas acquisition costs are also likely to reduce the demand for LNG by some LNG exporters. This is especially true if they do not have favourable contracts with overseas gas buyers. Gas prices are currently 4.6 times higher than Henry Hub in the Netherlands. This presents a huge profit opportunity for U.S. exporters of LNG who have the ability to deliver cargoes. The price differential between the U.S. and European markets is expected to narrow to 3.5 times Henry Hub by 2025. This will be due to the rising U.S. gasoline prices. It may even shrink further if European gas costs decline. Gas prices are expected to fluctuate in the future, causing further economic changes for gas production, exports and use. International traders will therefore continue to monitor gas prices for key markets even if the current prices are not showing much strength.
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Wall Street Journal - Sept 10
The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy. - China-based biotech business WuXi AppTec and its affiliate stated they don't pose any security threat to the U.S. or other nations after the U.S. House of Representatives passed a draft Biosecure Act. - Norfolk Southern President Alan Shaw is anticipated to depart the business as quickly as today in the middle of a board investigation. - Activist financier Starboard Worth stated News Corp. ought to eliminate its dual-class share structure, saying it provides. too much impact to the family of Rupert Murdoch. - Drugmaker Eli Lilly called Lucas Montarce as chief. financial officer, filling a vacancy left by the departure of. Anat Ashkenazi, who signed up with Google's parent business Alphabet. as CFO earlier this year. - Angela Zepeda, until just recently the top marketer at. Hyundai Motor America, will end up being the new international head of. marketing at social-media platform X Corp. .
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Ukraine launches drones at Moscow, other Russian regions, authorities say
Russia's air defence systems damaged a minimum of 7 Ukrainian drones targeting Moscow, while 59 of the air weapons were downed over the Bryansk area near the border with Ukraine, local officials stated on Tuesday. According to preliminary info, there is no damage or injuries at the site of the fall of the debris, Moscow's Mayor Sergei Sobyanin wrote in a post on the Telegram messaging app. The drones were ruined in the Lyubertsy and Ramenskoye districts of the Moscow area, in addition to in the Podolsk city district, Sobyanin said. Podolsk is some 38 km (24 miles) south of the Kremlin. Russia's SHOT and Baza Telegram channels, which are close to Russia's security services, stated flights at Moscow's Vnukovo and Domodedovo airports have been suspended while the drone attacks were taking place. Alexander Bogomaz, the governor of Russia's southwestern Bryansk area that borders Ukraine, said air defence systems destroyed 59 drones over the area overnight. There was no damage or injuries, he said on Telegram. Several drones were likewise downed in Russia's Lipetsk region, a number of hundred kilometres south of Moscow, the region's. guv Igor Artamonov, said on Telegram. He likewise reported no. injuries or severe damage. Russian authorities frequently do not reveal the complete level of. damage inflicted by Ukrainian attacks. Reuters could not individually confirm the reports. There. was no immediate remark from Ukraine. Kyiv has actually stated attacks on Russia's military, transport and. energy infrastructure are in response to Moscow's attacks on its. area given that the start of Russia's intrusion of Ukraine in. 2022.
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Boeing labor offer angers lots of union employees ahead of vote, authorities says
A tentative labor contract concurred in between Boeing and among its biggest unions has actually angered many employees who were hoping for greater wage walkings and better pensions, an authorities who negotiated the deal stated on Monday. The International Association of Machinists and Aerospace Employees (IAM), which represents more than 32,000 workers in the U.S. Pacific Northwest, revealed the offer in addition to Boeing on Sunday, sending out the aerospace giant's shares higher on Monday. It was unclear if IAM members would vote to accept the offer, or pick to strike when they hold a vote on Thursday, stated Jon Holden, president of the IAM's district 751 and lead arbitrator on the Boeing contract. They're upset, Holden informed Reuters, including that he thought it was the best offer the union could get in bargaining. The power is within our membership on the flooring, he said when asked if he thought the offer would be validated. The proposed four-year agreement consisted of a basic wage boost of 25% and a commitment by Boeing to construct its next business plane in the Seattle area, offering the aircraft program was released within the 4 years of the agreement. Holden said numerous members wanted to claim a 40%. pay rise over the contract period and a reinstatement of the. defined-benefit pension they unwillingly gave up throughout a. round of negotiations a decade back. It's difficult to come off of 10 years when you lost many. things that were crucial, Holden said. If union employees vote down the deal and decide to. strike, it would be a blow to new Boeing CEO Kelly Ortberg, who. took up his function last month with a required to enhance safety and. ramp up production of Boeing's very popular 737 MAX guest. jet. Boeing is wrestling with a quality crisis and faces. scrutiny from regulators and clients, after a door plug on a. near-new MAX blew off an Alaska Air jetliner while in. mid-air in January.
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United States court officer relocates to obstruct financial institutions from derailing Citgo auction
A U.S. federal court officer overseeing an auction of shares in the moms and dad of Venezuelaowned refiner Citgo Petroleum on Monday asked the judge in the case to avoid financial institutions from pursuing extra suits that could thwart the sales process. Three lenders that had signed up claims with the court but are unlikely to receive auction earnings have actually submitted separate lawsuits this year seeking to recoup billions of dollars from defaulted Venezuelan bonds. The three - Gramercy Distressed Chance Fund, G&A Strategic and Girard Street Investments - relate business. The parallel lawsuits have actually made complex the auction in U.S. District Court, Delaware, which aims after several hold-ups to choose a winner this month and complete a sale in November. The case was initially presented in Delaware in 2017 by miner Crystallex and has because enabled another 17 financial institutions consisting of bondholders to pursue shares in Citgo's moms and dad, PDV Holding. However, bids got so far would not cover the $21.3. billion in claims registered with the Delaware court. Citgo has. been valued at in between $11 billion and $13 billion, and the. highest offer in a first bidding round in January was $7.3. billion. The circumstance has actually prompted some creditors to submit lawsuits. in other courts. Gramercy, Girard Street and G&A claims are. near to the bottom of the list of companies likely to get. sales earnings. Reuters could not immediately reach the companies for. comment. Specific judgment financial institutions are seeking to circumvent this. court's sale procedure - regardless of their previous. participation in that procedure - by bringing last-minute suits. in other online forums, court officer Robert Pincus composed in his. request to the judge in the case. This threatens to undermine the sale procedure to the. hinderance of creditors who followed the court's process, he. included. Bidders are concerned about the threat that lenders will. later on lay claim to the assets they are attempting to obtain, he. stated. Pincus' request will be really difficult to meet, said. lawyer Jose Ignacio Hernandez from consultancy Aurora Macro. Methods, because the Delaware court does not have jurisdiction. over claims in other states.
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Boeing hold-ups suppliers' 737 MAX output objective by 6 months, sources state
Boeing has actually informed suppliers it is delaying a crucial production milestone for its 737 MAX by 6 months, 3 industry sources said, in a sign the planemaker is struggling to boost production of its best-selling jet. Boeing's most current 737 supplier master schedule communicated to the industry calls for MAX output to reach 42 a. month in March 2025, compared to a previous target of. September 2024, the sources told Reuters. Boeing has actually been having a hard time to recover production of its top. single-aisle guest aircraft due to additional safety and. regulative checks given that a door panel drastically flew off a 737. MAX jet in midair in January. While the so-called master schedule is a need signal, it. is not an official production target. Boeing has actually not changed its. main airplane production target, which calls for 38 MAX jets a. month by the end of 2024, up from roughly 25 jets a month in. July. When asked about the master schedule, a Boeing representative. directed Reuters to 2nd quarter comments made by CFO Brian. West in late July. On the master schedule, we continue to make adjustments as. required and manage provider by supplier based upon inventory. levels, West said. Our objective remains to keep the supply. chain paced ahead of last assembly to support stability. In an effort to line up with Boeing's lower production,. provider Spirit AeroSystems in August temporarily. lowered its regular monthly output of fuselages for the 737 MAX to 21 a. month from 31, decreasing demand for parts from its own supply. chain, a senior market source informed Reuters. Spirit AeroSystems representative Joe Buccino said we make. adjustments of shipment and production rates with our suppliers. in accordance with our supplier contracts. 2 of the sources, who work for suppliers, stated Boeing's. modifications to the internal target have actually made it harder for them to. forecast and strategy production. Efficiently managing providers is essential for both Boeing. and competing Airbus, which both want to grow output to. satisfy travel demand. In a separate move, Boeing Commercial Airplanes is. taking steps to integrate its operations and agreements groups in an. internal organizational modification anticipated to improve interaction. between providers and the planemaker, stated one of the sources. Boeing declined comment.
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Boeing hold-ups suppliers' 737 MAX output objective by 6 months, sources say
Boeing Co has informed suppliers it is delaying a crucial production milestone for its 737 MAX by 6 months, three market sources said, in an indication the planemaker is having a hard time to improve production of its bestselling jet. Boeing's latest 737 supplier master schedule interacted to the industry requires MAX output to reach 42 a. month in March 2025, compared to a previous target of. September 2024, the sources told Reuters. Boeing has been struggling to recuperate production of its top. single-aisle passenger airplane due to additional safety and. regulative checks considering that a door panel dramatically flew off a 737. MAX jet in midair in January. While the so-called master schedule is a need signal, it. is not an official production target. Boeing has actually not changed its. official airplane production target, which calls for 38 MAX jets a. month by the end of 2024, up from approximately 25 jets a month in. July. When inquired about the master schedule, a Boeing spokesperson. directed Reuters to second quarter comments made by CFO Brian. West in late July. On the master schedule, we continue to make changes as. needed and manage provider by provider based on inventory. levels, West stated. Our goal stays to keep the supply. chain paced ahead of final assembly to support stability. In an effort to line up with Boeing's lower production,. supplier Spirit AeroSystems in August momentarily. decreased its monthly output of fuselages for the 737 MAX to 21 a. month from 31, decreasing need for parts from its own supply. chain, a senior industry source informed Reuters. Spirit AeroSystems spokesperson Joe Buccino said we make. modifications of delivery and production rates with our suppliers. in accordance with our provider arrangements..
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Transco seeks temporary certificate to keep running mid-Atlantic natgas job
The Transcontinental Gas Pipe Line ( Transco) applied on Friday to the Federal Energy Regulatory Commission (FERC) for a momentary emergency situation certificate to continue running its new $1 billion gas task running through 5 midAtlantic states after the regulator's. approval was left. In July, a U.S. appeals court stated the FERC ought to have. much better evaluated the danger of considerable greenhouse gas. emissions, throwing out its approximate and capricious approval of the Regional. Energy Access Expansion Project. The temporary certificate is needed to keep Transco,. a system of Williams Cos, running its centers till the. FERC concerns an order on remand from the July 30 decision by the. court. The task is already partially in service. The FERC. approved the first phase on an interim basis in October 2023. In. June, Williams looked for consent to put more of the job. already under building and construction into service by July 1. A short-term certificate of public benefit and requirement. is required in order to avoid an emergency brought on by the sudden. loss of over 2,000,000 dekatherms per day of gas. pipeline transportation capability in the Mid-Atlantic and. northeastern U.S., the company said. Williams designed Regional Energy Access to assist fulfill. rising gas need and ease supply restrictions affecting. customers in Pennsylvania, New Jersey and Maryland. The company. stated the project, among the biggest under construction in the. U.S. Northeast, will offer sufficient gas to serve 4.4 million. homes each year.
Asia spot LNG prices are at a 7-month high amid Russian concerns
The Asian spot prices of liquefied Natural Gas (LNG), which track European gains, remained at the highest level for over seven months amid concerns about supply disruption.
Average LNG price for September deliveries into North-east Asia
Samuel Good, the head of commodity pricing agency Argus, said that the Asian price rises this week were largely attributed to the European gains. North-east Asian demand for LNG remained tepid despite the hot weather throughout the region.
In the next week, temperatures above average are expected in South Korea, Japan and China's Beijing, Shanghai. This could lead to a strong cooling demand. Good Said says that south-east China, where most of the gas-fired power generation capacity is located, could return to normal temperature in the next few weeks. This would leave little room for an increase in late summer electricity demand.
Klaas Dozeman of Brainchild Commodity Intelligence said that gas demand in Asia remains high enough to attract cargoes. He added that the current price levels may prevent price-sensitive buyers from buying on the spot market.
Dozeman stated that the most recent La Nina forecast was weaker, which could help reduce next winter's demand for gas in Asia and North America.
Gas prices in Europe have increased this week due to a heightened geopolitical threat in the Middle East, and also after Ukraine launched a surprise invasion into Russia's Kursk Region, from where Russian gas enters Ukraine.
On Friday morning, the benchmark front-month contract traded at 40.25 Euros at the Dutch TTF Hub. This was its highest price since December 8.
"While deliveries have remained unchanged, traders are still concerned about the nearly -40 million cubic meters per day of natural gas that pass through Sudzha. This has led some traders to adjust their positions to try to avoid running out of gas if prices spiked," Argus' Good stated.
S&P Global Commodity Insights estimated its daily North West Europe (NWM) LNG Marker price benchmark on August 8 at $12.6676/mmBtu for cargoes to be delivered in September, on a basis of ex-ship (DES). This represents a $0.15/mmBtu reduction from the gas price for September at the Dutch TTF Hub.
Spark Commodities estimated the price to be $12.717/mmBtu while Argus calculated it at $12.700/mmBtu.
Qasim Afghanistan, an analyst at Spark Commodities, reported that the Atlantic LNG freight rate rose to $75,250/day for the first week in a row on Friday. The Pacific rates also rose to $86,750/day for the seventh consecutive week. (Reporting and editing by Nina Chestney; Reporting by Marwa Rashed)
(source: Reuters)