U.S. natgas futures edge up ahead of storage report

Dec 1 (Reuters) - U.S. natural gas futures edged up about 1% on Thursday on a preliminary start of the month drop in U.S. output and rising global gas prices. That small price increase came despite forecasts for less cold weather and lower U.S. gas demand over the next two weeks than previously expected and ahead of a federal report expected to show a bigger-than-usual storage draw last week when colder-than-normal weather boosted heating demand. Analysts forecast U.S. utilities pulled 84 billion cubic feet (bcf) of gas from storage during the week ended Nov. 25. That compares with a decrease of 54 bcf in the same week last year and a five-year (2017-2021) average decline of 34 bcf. If correct, last week's decrease would cut stockpiles to 3.480 trillion cubic feet (tcf), or 2.5% below the five-year average of 3.569 tcf for this time of the year. Energy traders also noted U.S. gas demand would rise in December if Freeport LNG's liquefied natural gas (LNG) export plant in Texas returns to service as expected. Freeport LNG has said it plans to start producing LNG again in mid-December and reach full capacity of about 2.1 billion cubic feet per day (bcfd) in March. The plant was 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 hired by the company to review the incident and propose corrective actions. Freeport LNG, however, has not yet submitted a request to restart the plant to the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA), sources familiar with the company's filings have told Reuters. There are already a few ships waiting in the Gulf of Mexico to pick up LNG from Freeport - some have been there for weeks - including Prism Brilliance, Prism Diversity and Prism Courage, according to shipping data from Refinitiv. Front-month gas futures for January delivery on the New York Mercantile Exchange rose 5 cents, or 0.7%, to $6.980 per million British thermal units (mmBtu) at 7:14 a.m. EST (1214 GMT). U.S. gas futures are up about 88% 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 $47 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $33 at the Japan Korea Marker (JKM) in Asia. That puts gas futures in Europe up about 5% so far on Thursday as cold weather boosts heating demand. TOP PRODUCER U.S. gas futures lag global prices because the United States is the world's top producer with all the fuel it needs for domestic use, while capacity constraints and the Freeport outage have prevented the country from exporting more LNG. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to a record 99.5 bcfd in November, up from 99.2 bcfd in October. But on a daily basis, output was on track to drop about 2.1 bcfd to a preliminary 98.3 bcfd on Thursday. Traders, however, noted first of the month preliminary data was unreliable and is often revised higher. With colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would jump from 115.9 bcfd this week to 123.6 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Wednesday. Week ended Week ended Year ago Five-year Nov 25 Nov 18 Nov 25 average (Forecast) (Actual) Nov 25 U.S. weekly natgas storage change (bcf): -84 -80 -54 -34 U.S. total natgas in storage (bcf): 3,480 3,564 3,572 3,569 U.S. total storage versus 5-year average -2.5% -1.1% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 6.99 6.93 3.86 3.73 2.89 Title Transfer Facility (TTF) 46.02 43.09 37.67 16.04 7.49 Japan Korea Marker (JKM) 33.31 30.51 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 394 406 305 347 374 U.S. GFS CDDs 7 6 8 6 5 U.S. GFS TDDs 401 412 313 353 379 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 99.9 100.4 96.3 89.8 U.S. Imports from Canada 91.5 8.5 9.1 9.5 8.9 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3 Total U.S. Supply 109.2 108.5 109.5 105.8 99.0 U.S. Demand (bcfd) U.S. Exports to Canada 3.3 3.5 3.7 3.4 3.2 U.S. Exports to Mexico 5.3 5.7 5.6 5.8 5.0 U.S. LNG Exports 12.0 11.8 12.8 11.8 6.9 U.S. Commercial 15.4 13.7 15.1 12.7 14.6 U.S. Residential 25.3 22.2 25.1 19.5 24.6 U.S. Power Plant 31.4 27.1 28.9 28.5 27.3 U.S. Industrial 25.3 24.3 24.7 23.5 24.9 U.S. Plant Fuel 4.9 4.9 5.0 5.0 4.9 U.S. Pipe Distribution 2.8 2.5 2.7 2.5 2.5 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 105.2 94.9 101.6 91.8 98.9 Total U.S. Demand 125.8 115.9 123.6 112.8 114.0 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Dec 2 Nov 25 Nov 18 Nov 11 Nov 4 Wind 14 9 9 15 12 Solar 2 2 3 3 3 Hydro 6 6 7 6 5 Other 2 2 2 3 2 Petroleum 0 0 0 0 0 Natural Gas 33 39 41 38 39 Coal 19 20 18 16 18 Nuclear 22 20 20 20 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 7.00 6.03 Transco Z6 New York 6.80 6.30 PG&E Citygate 16.84 16.22 Dominion South 5.74 5.90 Chicago Citygate 5.93 6.44 Algonquin Citygate 10.00 6.61 SoCal Citygate 18.65 14.38 Waha Hub 5.19 5.56 AECO 5.52 7.07 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 94.75 64.25 PJM West 73.25 60.50 Ercot North 47.75 53.00 Mid C 190.00 160.00 Palo Verde 134.08 130.00 SP-15 168.50 129.25 (Reporting by Scott DiSavino; Editing by Chizu Nomiyama)