U.S. natgas futures slide 2% on rising output, lower LNG exports

Feb 8 (Reuters) - U.S. natural gas futures lost about 2% on Wednesday on a slow rise in output as warmer weather thaws frozen oil and gas wells, liquefied natural gas (LNG) exports decline and on forecasts for mostly mild weather to keep heating demand low through late February. That price decline came despite a growing belief in the market that Freeport LNG's export plant in Texas would start pulling in more gas in coming weeks to produce LNG for export. Many analysts, however, do not expect Freeport 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. Freeport was on track to start receiving gas from pipelines again on Wednesday after getting no gas on Tuesday, according to Refinitiv data. The plant received small amounts of gas from Jan. 26-Feb. 6. Freeport told Texas state regulators 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. Federal regulators will hold a public meeting on Freeport on Feb. 11 to allow interested parties to voice any concerns about Freeport's restart plans and get an update on what's happening at the plant. In other LNG news, the amount of gas flowing to U.S. LNG export plants dropped by about 1.2 billion cubic feet per day (bcfd) over the last five days to a preliminary two-week low of 11.8 bcfd on Wednesday due mostly to a 1.1-bcfd reduction in feedgas to Cheniere Energy Inc's 4.5-bcfd Sabine Pass export plant in Louisiana. Sabine is the nation's biggest LNG export plant. Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 23, with the exception of Friday and Saturday Feb. 17-18, when it was likely to have less impact on gas use less than during the week since many businesses shut for the weekend. Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) fell 6.1 cents, or 2.6%, to $2.523 per million British thermal units at 8:37 a.m. EST (1337 GMT). On Tuesday, the contract closed at the highest since Jan. 31. Last week, it fell to its lowest close since December 2020. With interest in gas markets rising in recent weeks, open interest in futures on the NYMEX rose over 1.2 million contracts on Tuesday, its highest since December 2021. On a daily basis, gas production hit a two-week high of 97.9 bcfd on Tuesday, up from a five-week low of 93.9 bcfd last week when extreme cold cut output by freezing oil and gas wells - known as freeze-offs - in several states, including Texas, New Mexico, Oklahoma and Pennsylvania. With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 125.0 bcfd this week to 119.8 bcfd next week. Those forecasts were similar to Refinitiv's outlook on Tuesday. Week ended Week ended Year ago Five-year Feb 3 Jan 27 Feb 3 average (Forecast) (Actual) Feb 3 U.S. weekly natgas storage change (bcf): -185 -151 -228 -171 U.S. total natgas in storage (bcf): 2,398 2,583 2,133 2,249 U.S. total storage versus 5-year average 6.6% +6.7% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2018-2022) Henry Hub 2.56 2.58 4.46 6.54 3.60 Title Transfer Facility (TTF) 17.21 17.16 26.94 40.50 14.39 Japan Korea Marker (JKM) 18.19 18.50 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 349 349 405 406 399 U.S. GFS CDDs 5 4 4 6 5 U.S. GFS TDDs 354 353 409 412 404 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 96.6 97.0 91.7 87.7 U.S. Imports from Canada 8.4 8.3 8.2 10.2 9.1 U.S. LNG Imports 0.0 0.1 0.0 0.2 0.2 Total U.S. Supply 104.3 105.2 105.1 102.1 97.0 U.S. Demand (bcfd) U.S. Exports to Canada 2.2 2.7 2.7 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 12.4 11.5 12.3 6.6 U.S. Commercial 18.4 16.0 14.4 19.4 16.4 U.S. Residential 31.5 26.4 23.4 33.3 27.7 U.S. Power Plant 33.5 30.0 30.3 29.6 28.1 U.S. Industrial 26.1 24.6 24.5 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 117.5 104.7 100.3 116.2 105.4 Total U.S. Demand 137.4 125.0 119.8 136.7 119.9 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 16 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 35 39 38 36 38 Coal 17 21 19 18 19 Nuclear 21 19 21 21 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.35 2.17 Transco Z6 New York 2.45 2.19 PG&E Citygate 4.77 4.77 Eastern Gas (old Dominion South) 2.02 1.90 Chicago Citygate 2.38 2.13 Algonquin Citygate 2.83 3.17 SoCal Citygate 4.76 4.42 Waha Hub 1.78 1.29 AECO 2.16 2.05 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 31.75 49.25 PJM West 28.50 27.25 Ercot North 21.50 14.00 Mid C 54.50 53.25 Palo Verde 45.50 44.00 SP-5 43.75 42.25 (Reporting by Scott DiSavino; editing by Barbara Lewis)