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US natgas futures edge up on expectations of cold weather

Credit: REUTERS/Nick Oxford

Adds quote, latest prices

Feb 5 (Reuters) - U.S. natural gas futures edged up about 0.2% on Monday, on hopes that winter might reappear, ending the downward spiral in prices despite forecasts for lower demand and rising output.

Front-month gas futures NGc1 for March delivery on the New York Mercantile Exchange (NYMEX) rose 0.3 cents, or about 0.1%, to settle at $2.082 per million British thermal units (mmBtu). On Thursday, the contract settled at its lowest since April 13, 2023.

"There are some weather models that are talking about another potential polar vortex somewhere around Valentine's day, and that's giving the market a little bit of life," said Phil Flynn, an analyst at Price Futures Group.

"So even though we've seen some extremely above normal temperatures, the return of winter is stopping the free fall on prices."

Meteorologists projected temperatures in the Lower 48 states would remain warmer than normal through at least Feb. 15 before turning near normal on Feb. 16-17. Colder temperatures should boost heating demand in mid-February. For now, meteorologists expect the weather to remain warmer than normal.

LSEG estimated 358 heating degree days (HDDs) over the next two weeks, up from 333 HDDs estimated on Friday. The normal for this time of year is 408 HDDs.

Financial company LSEG said gas output in the U.S. Lower 48 states rose to an average of 105.4 billion cubic feet per day (bcfd) so far in February from 102.0 bcfd in January. That was still below the monthly record high of 106.3 bcfd in December.

LSEG forecast U.S. gas demand in the Lower 48, including exports, would fall from 122.5 bcfd this week to 122.4 bcfd next week. The forecast for next week was lower than LSEG's outlook on Friday.

Gas flows to the seven big U.S. LNG export plants rose to an average of 13.7 bcfd so far in February, down from 13.9 in January. That was still below the monthly record high of 14.7 bcfd in December.

Analysts said U.S. LNG feedgas would likely not revisit record levels until Freeport LNG export plant in Texas returns to full power, which is expected to occur in mid- to late-February.

The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine.

Gas was trading around $9 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and the Japan Korea Marker (JKM) benchmark in Asia JKMc1. NG/EU

Week ended Feb 2 Forecast

Week ended Jan 26 Actual

Year ago Feb 2

Five-year average

Feb 2

U.S. weekly natgas storage change (bcf):

-86

-197

-208

-193

U.S. total natgas in storage (bcf):

2,573

2,659

2,397

2,336

U.S. total storage versus 5-year average

10.1%

5.1%

Global Gas Benchmark Futures ($ per mmBtu)

Current Day

Prior Day

This Month Last Year

Prior Year Average 2023

Five Year Average (2018-2022)

Henry Hub NGc1

2.08

2.07

2.44

2.66

3.60

Title Transfer Facility (TTF) TRNLTTFMc1

9.43

9.25

16.52

13.04

14.39

Japan Korea Marker (JKM) JKMc1

9.46

9.46

16.87

14.39

14.31

LSEG Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast

Current Day

Prior Day

Prior Year

10-Year Norm

30-Year Norm

U.S. GFS HDDs

358

333

326

405

408

U.S. GFS CDDs

1

1

6

6

5

U.S. GFS TDDs

359

334

332

411

413

LSEG U.S. Weekly GFS Supply and Demand Forecasts

Prior Week

Current Week

Next Week

This Week Last Year

Five-Year (2019-2023) Average For Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production

103.2

105.5

105.3

97.8

92.4

U.S. Imports from Canada

10.0

9.4

9.3

9.3

9.1

U.S. LNG Imports

0.0

0.0

0.0

0.0

0.2

Total U.S. Supply

113.2

114.8

114.6

107.1

101.7

U.S. Demand (bcfd)

U.S. Exports to Canada

2.5

3.5

3.5

2.1

2.7

U.S. Exports to Mexico

5.9

6.0

6.3

5.6

5.2

U.S. LNG Exports

13.7

13.6

13.7

12.7

8.4

U.S. Commercial

18.2

13.9

13.4

19.2

16.3

U.S. Residential

30.9

22.7

21.5

33.1

27.6

U.S. Power Plant

38.7

30.2

31.6

34.5

29.3

U.S. Industrial

26.2

24.5

24.4

26.3

25.4

U.S. Plant Fuel

5.1

5.2

5.2

5.1

5.3

U.S. Pipe Distribution

3.3

2.6

2.6

3.3

2.7

U.S. Vehicle Fuel

0.1

0.1

0.1

0.1

0.1

Total U.S. Consumption

122.5

99.3

98.9

121.6

106.7

Total U.S. Demand

144.5

122.5

122.4

142.0

123.0

U.S. weekly power generation percent by fuel - EIA

Week ended Feb 2

Week ended Jan 26

Week ended Jan 19

Week ended Jan 12

Week ended Jan 5

Wind

9

7

10

14

8

Solar

3

2

2

2

2

Hydro

7

6

6

6

6

Other

2

2

2

2

2

Petroleum

Natural Gas

40

43

39

38

42

Coal

18

22

23

19

19

Nuclear

20

19

17

19

20

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub

Current Day

Prior Day

Henry Hub NG-W-HH-SNL

2.01

2.15

Transco Z6 New York NG-CG-NY-SNL

1.95

1.90

PG&E Citygate NG-CG-PGE-SNL

3.25

3.46

Eastern Gas (old Dominion South) NG-PCN-APP-SNL

1.76

1.75

Chicago Citygate NG-CG-CH-SNL

1.73

1.89

Algonquin Citygate NG-CG-BS-SNL

4.96

4.40

SoCal Citygate NG-SCL-CGT-SNL

2.64

2.82

Waha Hub NG-WAH-WTX-SNL

0.86

1.60

AECO NG-ASH-ALB-SNL

1.78

1.34

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub

Current Day

Prior Day

New England EL-PK-NPMS-SNL

49.00

44.50

PJM West EL-PK-PJMW-SNL

21.75

19.25

Ercot North EL-PK-ERTN-SNL

11.50

17.00

Mid C EL-PK-MIDC-SNL

59.25

43.75

Palo Verde EL-PK-PLVD-SNL

25.50

30.50

SP-15 EL-PK-SP15-SNL

51.00

33.75

(Reporting by Brijesh Patel and Rahul Paswan in Bengaluru; Editing by Kirsten Donovan and David Gregorio)

((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 9590227221; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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