U.S. natgas futures gain 1% with output slow to return

Feb 7 (Reuters) - U.S. natural gas futures rose about 1% to a one-week high on Tuesday as output remains lower than last month after extreme cold last week froze oil and gas wells in several producing basins. Also supporting prices was a growing belief that Freeport LNG's export plant in Texas was on track to start pulling in a lot more gas in coming weeks once it starts producing liquefied natural gas (LNG) for export. But Freeport was on track to receive no natural gas from pipelines on Tuesday after taking in small amounts over the past 12 days, according to Refinitiv data. The small gas price rise came despite forecasts for milder weather and lower heating demand over the next two weeks than previously expected. Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 22 except for a few cold days around the Feb. 18-19 weekend. Traders noted that cold on the weekend does not boost gas use as much as during the workweek because usage is lower on weekends when many businesses are shut. Freeport told Texas state regulators last week that it would start sending gas to one of three liquefaction trains at its long-closed export plant. The plant is waiting for permission from federal regulators to start loading LNG to free up space in its storage tanks. The liquefaction trains turn gas into LNG for export. Many analysts have said they do not expect the plant to return to full power until mid March or later. A couple of Freeport's customers - Japan's JERA and Osaka Gas - have said they do not expect to get LNG from the plant until after March. Freeport, the second biggest U.S. LNG export plant, shut after a fire in June 2022. The energy market expects gas prices to rise once the plant starts producing LNG again. When operating at full power, Freeport can turn about 2.1 billion cubic feet of gas into LNG each day. That is about 2% of total U.S. daily gas production. Federal regulators will hold a public meeting on Freeport on Feb. 11 to provide members of the community and other interested parties an opportunity to voice their concerns about Freeport's restart plans and get an update on what's happening at the plant. Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) rose 3.3 cents, or 1.3%, to $2.490 per million British thermal units at 9:25 a.m. EST (1425 GMT), putting the contract on track for its highest close since Jan. 31. Last week, the contract fell to its lowest since December 2020. With interest in gas markets rising in recent weeks, open interest in the NYMEX front-month jumped to nearly 302,000 contracts on Monday, its highest since August 2021 for a sixth day in a row. At the same time, the number of shares outstanding in the U.S. Natural Gas Fund, an exchange-traded fund (ETF) designed to track daily gas price movements, rose by 14.4 million on Monday to a fresh record high of 117.5 million. That was the second biggest daily increase in UNG shares outstanding, following a record 15.7 million share increase in January, and caused total shares outstanding to more than double in less than two weeks. Refinitiv said average gas output in the U.S. Lower 48 states fell to 95.7 billion cubic feet per day (bcfd) so far in February, down from 98.3 bcfd in January. That compares with a monthly record of 99.8 bcfd in November 2022. With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 124.9 bcfd this week to 119.8 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Monday. Week ended Week ended Year ago Five-year Feb 3 Jan 27 Feb 3 average (Forecast) (Actual) Feb 3 U.S. weekly natgas storage change (bcf): -185 -151 -228 -171 U.S. total natgas in storage (bcf): 2,398 2,583 2,133 2,249 U.S. total storage versus 5-year average 6.6% +6.7% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2018-2022) Henry Hub 2.47 2.46 4.46 6.54 3.60 Title Transfer Facility (TTF) 18.10 18.18 26.94 40.50 14.39 Japan Korea Marker (JKM) 18.50 18.53 25.82 34.11 14.31 Refinitiv 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 349 354 405 406 402 U.S. GFS CDDs 4 4 4 6 5 U.S. GFS TDDs 353 358 409 412 407 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Week Next Week This Week Five-Year Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 96.0 96.3 96.4 91.7 87.7 U.S. Imports from Canada 8.4 8.5 8.1 10.2 9.1 U.S. LNG Imports 0.0 0.1 0.0 0.2 0.2 Total U.S. Supply 104.3 104.9 104.5 102.1 97.0 U.S. Demand (bcfd) U.S. Exports to Canada 2.2 2.6 2.5 2.2 2.7 U.S. Exports to Mexico 5.1 5.1 5.3 6.0 5.2 U.S. LNG Exports 12.6 12.7 12.1 12.3 6.6 U.S. Commercial 18.4 16.0 14.2 19.4 16.4 U.S. Residential 31.5 26.3 23.1 33.3 27.7 U.S. Power Plant 33.5 30.0 30.6 29.6 28.1 U.S. Industrial 26.1 24.6 24.4 26.0 25.2 U.S. Plant Fuel 4.7 4.8 4.8 4.9 4.8 U.S. Pipe Distribution 3.1 2.8 2.7 2.9 3.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 117.5 104.6 99.9 116.2 105.4 Total U.S. Demand 137.4 124.9 119.8 136.7 119.9 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended eek ended Feb 10 Feb 3 Jan 27 Jan 20 Jan 13 Wind 15 10 11 13 11 Solar 3 2 2 2 2 Hydro 6 7 7 7 7 Other 2 2 2 2 2 Petroleum 1 0 0 0 0 Natural Gas 36 39 38 36 38 Coal 18 21 19 18 19 Nuclear 20 19 21 21 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.17 2.40 Transco Z6 New York 2.19 4.51 PG&E Citygate 4.77 4.93 Eastern Gas (old Dominion South) 1.90 2.12 Chicago Citygate 2.13 2.42 Algonquin Citygate 3.17 11.00 SoCal Citygate 4.42 4.15 Waha Hub 1.29 1.49 AECO 2.05 2.00 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 49.25 215.75 PJM West 27.25 59.75 Ercot North 14.00 17.50 Mid C 53.25 48.50 Palo Verde 44.00 42.10 SP-5 42.25 39.00 (Reporting by Scott DiSavino; editing by Jonathan Oatis)