U.S. natgas rises 3% on colder forecasts ahead of storage report

Dec 8 (Reuters) - U.S. natural gas futures gained about 3% on Thursday on forecasts for colder weather and higher heating demand over the next two weeks than previously expected. That price decline came ahead of a federal report expected to show a smaller than usual storage decline last week when mild weather kept heating demand low. Analysts forecast U.S. utilities pulled 31 billion cubic feet (bcf) of gas from storage during the week ended Dec. 2. That compares with a decrease of 59 bcf in the same week last year and a five-year (2017-2021) average decline of 49 bcf. If correct, last week's decrease would cut stockpiles to 3.452 trillion cubic feet (tcf), or 1.9% below the five-year average of 3.520 tcf for this time of the year. The price increase also came despite Freeport LNG's announcement last week that it plans to delay the restart of its liquefied natural gas (LNG) export plant in Texas from mid-December to the end of the year. That delay should keep LNG exports below record levels hit in March and leave more gas in the United States for domestic use. Some analysts, moreover, do not expect Freeport to return until January, February or later because it will likely take federal pipeline safety regulators longer than Freeport expects to review and approve the plant's restart plan once the company submits it. At least one LNG vessel, Prism Brilliance, seems to have given up on Freeport after the company delayed the planned restart, according to ship tracking data from Refinitiv. The ship was on its way to Jamaica but in the last few hours has turned back toward the Gulf of Mexico. Two other vessels - Prism Diversity and Prism Courage - meanwhile, were still waiting in the Gulf of Mexico near Freeport to pick up LNG from the plant. The plant, which can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG, shut on June 8 due to an explosion caused by inadequate operating and testing procedures, human error and fatigue, according to a report by consultants the company hired to review the incident and suggest corrective actions. Front-month gas futures for January delivery on the New York Mercantile Exchange rose 18.4 cents, or 3.2%, to $5.907 per million British thermal units (mmBtu) at 8:31 a.m. EST (1331 GMT). In the spot market, meanwhile, gas prices in California have nearly doubled over the past couple of weeks as freezing weather and snow blankets parts of the state and pipeline outages and constraints limit gas flows from Texas. In Northern California, next-day gas for Thursday at the PG&E citygate hit its highest since February 2014, while gas at the Southern California Border rose to its highest since February 2021. The combination of mild weather in Texas and those pipeline constraints and maintenance outages limiting gas flows to California helped cut spot prices at the Waha hub in the Permian basin in West Texas by around 80% over the past week. U.S. gas futures are up about 58% so far this year as much higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine. Gas was trading at $46 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $33 at the Japan Korea Marker (JKM) in Asia. With colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise from 118.4 bcfd this week to 121.9 bcfd next week. Those forecasts were higher than Refinitiv's outlook on Wednesday. The average amount of gas flowing to U.S. LNG export plants held around 11.8 bcfd so far in December, the same as in November. That remains below the monthly record of 12.9 bcfd in March due to the Freeport outage. Week ended Week ended Year ago Five-year Dec 2 Nov 25 Dec 2 average (Forecast) (Actual) Dec 2 U.S. weekly natgas storage change (bcf): -31 -81 -59 -49 U.S. total natgas in storage (bcf): 3,452 3,483 3,513 3,520 U.S. total storage versus 5-year average -1.9% -2.4% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 5.85 5.72 3.86 3.73 2.89 Title Transfer Facility (TTF) 46.31 45.87 37.67 16.04 7.49 Japan Korea Marker (JKM) 33.35 32.85 37.84 18.00 8.95 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 401 380 317 370 398 U.S. GFS CDDs 9 9 15 5 4 U.S. GFS TDDs 410 389 332 375 403 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 100.1 99.6 99.9 95.7 89.8 U.S. Imports from Canada 8.5 8.2 9.0 9.4 8.9 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3 Total U.S. Supply 108.6 107.9 108.9 105.1 99.0 U.S. Demand (bcfd) U.S. Exports to Canada 3.4 3.3 3.3 3.5 3.2 U.S. Exports to Mexico 5.6 5.4 5.5 5.7 5.0 U.S. LNG Exports 11.8 11.6 11.8 12.0 6.9 U.S. Commercial 13.6 13.5 14.5 13.9 14.6 U.S. Residential 22.1 21.6 24.0 22.1 24.6 U.S. Power Plant 27.1 31.3 30.8 29.2 27.3 U.S. Industrial 24.3 24.1 24.2 23.9 24.9 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.5 2.6 2.7 2.6 2.5 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 94.7 98.1 101.3 96.7 98.9 Total U.S. Demand 115.7 118.4 121.9 117.9 114.0 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Dec 9 Dec 2 Nov 25 Nov 18 Nov 11 Wind 11 15 9 9 15 Solar 2 2 2 3 3 Hydro 6 6 6 7 6 Other 2 2 2 2 3 Petroleum 0 0 0 0 0 Natural Gas 38 35 39 41 38 Coal 20 19 20 18 16 Nuclear 21 21 20 20 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 4.49 4.58 Transco Z6 New York 4.40 3.95 PG&E Citygate 21.12 17.84 Dominion South 4.06 3.77 Chicago Citygate 4.31 4.28 Algonquin Citygate 4.85 4.02 SoCal Citygate 22.29 17.75 Waha Hub 0.88 1.38 AECO 3.78 3.91 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 49.25 51.50 PJM West 58.50 55.75 Ercot North 46.75 44.50 Mid C 155.75 152.50 Palo Verde 172.75 133.50 SP-15 183.75 143.50 (Reporting by Scott DiSavino)