U.S. natgas ease on expected big storage build, coronavirus demand destruction

U.S. natural gas futures eased on expectations a federal report will
show a bigger-than-usual weekly storage build and forecasts of coming demand destruction from the
coronavirus outbreak.
    Analysts said utilities likely injected 24 billion cubic feet (bcf) of gas into storage during the
week ended April 3. That compares with an increase of 25 bcf during the same week last year and a
five-year (2015-19) average build of 6 bcf for the period.
    If correct, the increase for the week ended April 3 would bring stockpiles to 2.010 trillion cubic
feet (tcf), 18.2% above the five-year average of 1.700 tcf for this time of year.
    The U.S. Energy Information Administration will release its weekly storage report at 10:30 a.m. EDT
(1430 GMT) on Thursday.
    On last day of trade before the long Good Friday holiday weekend, front-month gas futures for
May delivery on the New York Mercantile Exchange fell 1.2 cents, or 0.7%, to $1.771 per million British
thermal units.
    For the week, that puts the front month up 9% after falling about 1% last week to its lowest since
August 1995.
    Even before the coronavirus started to cut global economic growth and energy demand, gas was already
trading near its lowest in years as record production and months of mild winter weather enabled utilities
to leave more fuel in storage, making shortages and price spikes unlikely.
    Analysts said steps to slow the spread of coronavirus reduced demand from commercial and industrial
companies as offices closed and factories run at lower capacities. Electricity trade group Edison
Electric Institute (EEI) said power demand fell last week to a 16-year low EEI-.
    The EIA projected U.S. gas consumption would fall to 83.79 billion cubic feet per day (bcfd) in 2020
and 81.24 bcfd in 2021 from a record 84.97 bcfd in 2019. That would be the first annual decline in
consumption since 2017 and the first time demand falls for two consecutive years since 2006.
    Looking ahead, however, gas futures for the balance of 2020 and calendar 2021
were trading much higher than the front month on expectations demand will jump in coming months as the
economy recovers with the loosening of travel and work restrictions as the spread of the new coronavirus
slows. Calendar 2021 has traded at a premium over 2022 for 20 days and over 2025 for
10 days.
    In Texas, gas forwards for 2021 at the Waha hub in the Permian basin were trading at their highest
levels in years, up from below zero now, on expectations gas supplies from oil drilling will drop as low
crude prices prompt energy firms to cut rigs.
    With cooler weather still coming, data provider Refinitiv projected gas demand in the U.S. Lower 48
states, including exports, will rise from an average of 92.4 billion cubic feet per day (bcfd) this week
to 98.7 bcfd next week. That is similar of Refinitiv's forecasts on Wednesday.
    

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