US natgas prices hold near six-month low on record output, mild weather

By Scott DiSavino Dec 13 (Reuters) - U.S. natural gas futures held near a six-month low on Wednesday on record output and forecasts for mild weather and lower heating demand next week than previously expected that should allow utilities to pull less gas from storage than usual through at least late December. Analysts forecast there was currently around 7.8% more gas in storage than usual for this time of year. Front-month gas futures for January delivery on the New York Mercantile Exchange (NYMEX) fell 1 cent, or 0.4%, to $2.301 per million British thermal units (mmBtu) at 9:16 a.m. EST (1416 GMT), putting the contract on track for its lowest close since June 12 for a second day in a row. That kept the front-month in technically oversold territory with a Relative Strength Index (RSI) below 30 for a sixth day in a row for the first time since February. The number of futures contracts traded on the NYMEX jumped to a 1.004 million on Dec. 11, its highest since March 2020. But a lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 45.9%, the lowest since September 2021. Historic daily volatility hit a record high of 177.7% in February 2022 and a record low of 7.3% in June 1991. Historic volatility has averaged 71.5% so far this year, versus a record high of 92.8% in 2022 and a five-year (2018-2022) average of 57.9%. With record production and ample gas in storage, futures have been sending bearish signals for weeks that prices this winter (November-March) likely already peaked in November. The premium of futures for 2029 (five years out) over 2024 rose to a record high for a fourth day in a row. Analysts expect prices to climb in coming years as demand for the fuel grows as new U.S. liquefied natural gas (LNG) export plants enter service in the U.S., Canada and Mexico. For 2024, however, some analysts have reduced their U.S. demand forecasts after Exxon Mobil delayed the start of first LNG production at its 2.3-billion-cubic-feet-per-day (bcfd) Golden Pass export plant under construction in Texas to the first half of 2025 from the second half of 2024. SUPPLY AND DEMAND Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 108.4 bcfd so far in December from a record 108.3 bcfd in November. Meteorologists projected the weather would remain warmer than normal through at least Dec. 28. With the weather remaining mild, LSEG forecast U.S. gas demand in the Lower 48, including exports, would slide from 125.0 bcfd this week to 122.2 bcfd next week. The forecast for this week was higher than LSEG's outlook on Tuesday, while its forecast for next week was lower. Gas flows to the seven big U.S. LNG export plants rose to an average of 14.6 bcfd so far in December, up from a record 14.3 bcfd in November. The U.S. is on track to become the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar. Much higher global prices have fed demand for U.S. exports due in part to supply disruptions and sanctions linked to the war in Ukraine. Gas was trading around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $16 at the Japan Korea Marker (JKM) in Asia. Week ended Week ended Year ago Five-year Dec 8 Dec 1 Dec 8 average Forecast Actual Dec 8 U.S. weekly natgas storage change (bcf): -48 -117 -46 -81 U.S. total natgas in storage (bcf): 3,671 3,719 3,419 3,404 U.S. total storage versus 5-year average 7.8% 6.7% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2017-2021) Henry Hub 2.30 2.31 5.77 6.54 2.89 Title Transfer Facility (TTF) 11.22 11.02 36.68 40.50 7.49 Japan Korea Marker (JKM) 15.62 15.75 32.34 34.11 8.95 LSEG 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 320 317 475 387 411 U.S. GFS CDDs 1 2 3 5 4 U.S. GFS TDDs 321 319 378 392 415 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year (2018-2022) Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 108.1 108.8 109.0 102.8 94.2 U.S. Imports from Canada8 8.8 8.6 8.9 10.0 9.1 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.2 Total U.S. Supply 116.9 117.5 117.9 112.8 103.5 U.S. Demand (bcfd) U.S. Exports to Canada 3.3 3.4 3.4 3.4 3.2 U.S. Exports to Mexico 3.9 3.9 4.8 5.2 5.0 U.S. LNG Exports 14.5 14.6 14.0 12.6 8.6 U.S. Commercial 13.2 13.9 13.0 15.4 14.6 U.S. Residential 20.9 22.5 20.7 25.8 24.7 U.S. Power Plant 33.2 33.7 33.7 30.4 28.6 U.S. Industrial 24.3 24.7 24.3 24.7 25.0 U.S. Plant Fuel 5.3 5.4 5.4 5.3 5.3 U.S. Pipe Distribution 2.7 2.7 2.7 2.7 2.9 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 99.8 103.1 99.9 104.4 101.2 Total U.S. Demand 121.4 125.0 122.2 125.6 118.0 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 83 82 83 107 81 Jan-Jul 81 82 77 102 79 Oct-Sep 82 83 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Dec 15 Dec 8 Dec 1 Nov 24 Nov 17 Wind 13 12 10 11 9 Solar 3 3 3 3 3 Hydro 5 5 6 6 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 40 40 42 39 42 Coal 16 17 17 16 17 Nuclear 21 21 20 22 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.37 2.39 Transco Z6 New York 2.10 2.07 PG&E Citygate 4.04 4.02 Eastern Gas (old Dominion South) 1.86 1.82 Chicago Citygate 2.16 2.13 Algonquin Citygate 4.00 3.08 SoCal Citygate 4.15 3.78 Waha Hub 2.00 1.57 AECO 1.22 1.17 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 38.25 34.25 PJM West 39.50 48.50 Ercot North 21.00 23.25 Mid C 59.08 63.00 Palo Verde 43.25 45.50 SP-15 49.00 51.75 (Reporting by Scott DiSavino, Editing by Nick Zieminski)