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US natgas on track for 8th week of record production losses

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U.S. natural gas futures fell about 2% on Friday as record production and reduced

exports of liquefied natural gas (LNG) have allowed utilities to inject much larger than normal amounts of gas into

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storage for the winter over the past month.

This puts the contract on track to decline for an eighth straight week for the first time since February.

2001.

Major LNG outages include Berkshire Hathaway Energy shutting down its 0.8 billion cubic feet per day

(bcfd) Cove Point LNG export plant in Maryland for approximately three weeks of scheduled maintenance on October 1 and the

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Ongoing shutdown of Freeport LNG’s 2.0 bcfd plant in Texas for unscheduled work after an explosion on June 8.

Freeport expects the facility to be at least partially back in service in early to mid-November.

According to Refinitiv data, at least three ships are heading to Freeport, including Prism

Brilliance (expected to arrive October 18), Prism Diversity (October 27), and Seapeak Methane (November 22), prompting

some traders believe Freeport will return in November. Others on the market, however, believe that the factory

the return will be delayed. Freeport officials said they remain on track to return the plant in November.

First-month gas futures fell 13.5 cents, or 2.0%, to $6.606 per million British thermal units

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(mmBtu) as of 8:43 a.m. EDT (12:43 p.m. GMT).

For the week, the contract was down around 2%, bringing its eight-week losses to around 33%.

U.S. futures were still up around 77% so far this year as soaring global gas prices fuel demand

for US exports due to supply disruptions and sanctions related to Russia’s February 24 invasion of Ukraine.

Gas was trading at $42 per mmBtu in Europe and $35 in Asia.

That puts European forwards down around 5% and on track for their lowest close since June 28 as strong LNG

imports have increased the amount of gas stored in the countries of the North-West of the continent for

healthy levels above 90% capacity. European prices hit an all-time high of $90.91 on August 25.

Exports of Russian gas via the three main lines to Germany – Nord Stream 1 (Russia-Germany), Yamal

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(Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route – averaged

only 1.3 bcfd so far in October, similar to September but well below the 9.2 bcfd seen in October 2021.

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U.S. gas futures are lagging far behind world prices because the U.S. is the world’s largest producer with

all the fuel it needs for domestic use, while capacity constraints and the Freeport outage prevent the country

to export more LNG.

Data provider Refinitiv said average US gas production in the lower 48 states had risen to 99.9 billion cubic feet per day so far in

October, compared to a monthly record of 99.4 bcfd in September.

Refinitiv forecast average U.S. gas demand, including exports, to drop from 92.8 billion cubic feet per day this week to

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99.3 bcfd next week with the arrival of colder weather before sliding to 97.2 bcfd in two weeks with the return

milder temperatures. The forecast for this week and next week was higher than Refinitiv’s outlook on

Thursday.

The average amount of gas flowing to LNG export plants in the United States has fallen to 10.9 bcfd so far in October, from 11.5

bcfd in September. This compares to a monthly high of 12.9 bcfd in March. America’s Seven Great Export Factories

can transform approximately 13.8 bcfd of gas into LNG.

Weekend Weekend One year ago Five years

Oct. 14 Oct. 7 Oct. 14 average

(Forecast) (Actual) Oct. 14

US Nat Gas Storage Weekly Change (bcf): +104 +125 +91 +73

Total nat gas in storage in the United States (bcf): 3,335 3,231 3,448 3,525

Total US storage vs. 5-year average -5.4% -6.4%

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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 6.64 6.74 5.57 3.73 2.89

Securities Transfer Facility (TTF) 41.58 43.97 30.84 16.04 7.49

Japan Korea marker (JKM) 34.84 34.71 33.22 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 169 165 86 118 149

DC GFS US 34 33 63 46 37

United States GFS TDD 203 198 149 164 186

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 100.2 99.7 99.3 94.2 87.0

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US imports from Canada 8.0 7.8 8.0 8.0 7.7

US LNG imports 0.0 0.0 0.0 0.0 0.1

Total US Supply 108.2 107.4 107.3 102.2 94.8

US demand (bcfd)

US exports to Canada 2.1 2.5 2.5 2.3 2.4

US exports to Mexico 5.6 5.5 5.6 5.9 5.3

US LNG exports 11.0 11.0 10.8 10.7 5.6

Commercial in the United States 5.7 6.2 8.4 5.5 6.8

US residential 5.6 6.6 10.9 5.3 7.3

US power plant 31.6 32.2 31.0 29.8 29.0

US industry 21.5 21.8 22.9 21.0 21.8

US vegetable fuel 5.0 4.9 4.9 4.9 4.9

Distribution of pipes in the United States 1.9 2.0 2.1 2.0 1.9

Fuel for US vehicles 0.1 0.1 0.1 0.1 0.1

Total consumption in the United States 71.4 73.8 80.4 68.6 71.8

Total US demand 90.1 92.8 99.3 87.5 85.1

Percentage of US Weekly Electricity Generation by Fuel – EIA

Weekend Weekend Weekend Weekend Weekend

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Oct. 14 Oct. 7 Sept. 30 Sept. 23 Sept. 16

Wind 10 9 10 8 6

Solar 3 4 3 3 3

Hydroelectricity 5 6 5 5 6

Other 3 3 2 2 2

Oil 0 0 0 0 0

Natural gas 40 41 41 42 45

Coal 19 18 19 19 21

Nuclear 19 21 19 19 18

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

Hub Current day Previous day

Henry Hub 6.25 6.60

Transco Z6 New York 5.39 5.44

PG&E City Gate 7.76 8.04

Dominion South 5.10 5.25

Chicago city gate 5.49 5.81

Algonquin City Gate 5.53 6.06

SoCal City Gate 8.00 8.06

Waha Center 4.06 4.32

AECO 3.15 1.07

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

Hub Current day

New England 58.25 64.75

PJM West 72.00 75.75

Ercot North 54.20 67.75

Middle C 77.25 73.75

Palo Green 64.25 62.00

SP-15 67.50 71.00

(Reporting by Scott DiSavino; Editing by Kirsten Donovan)

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