UPDATE 1-U.S. natgas jumps 6% in low volume trade ahead of contract expiration

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(Adds latest prices, context) Jan 27 (Reuters) - U.S. natural gas futures jumped about 6% on Friday from a 20-month low in the prior session as late buying during a low-volume day ahead of the expiration of the February contract caused prices to swing wildly from negative to positive several times in the last half hour of trade. Traders noted this usually happens as some gas sellers seek to exit their front-month futures positions on the New York Mercantile Exchange (NYMEX) before they expire because they do not want to deliver gas to the Henry Hub in Louisiana. Volatility often peaks near contract expiration days because trading volumes are usually extremely low since few in the market want to deliver or take gas from the Henry Hub. There were only about 3,476 front-month contracts traded on the NYMEX on Friday. That compares with an average of 138,000 front-month contracts traded daily on the NYMEX over the past five years (2018 to 2022). In 2022, gas prices soared by a record 46% on the day the February contract expired before plunging 26% the next day when the March contract became the new front-month. On its last day as the front-month, gas futures for February delivery rose 16.5 cents, or 5.6%, to settle at $3.109 per million British thermal units (mmBtu). On Thursday, the contract closed at its lowest since May 2021. For the week, the contract lost about 2%, putting it down for a sixth week in a row for the first time since October. During those six weeks, the front-month has dropped about 53%. The March contract, which will soon be the front-month, was little changed on Friday at $2.84 per mmBtu. Earlier in the day, gas futures were down about 4% due in part to a growing belief that there is more than enough gas in storage for the rest of the winter. The weather, meanwhile, is expected to turn from warmer than normal now to colder than normal from Jan. 30 to Feb. 6 before turning warmer than normal again through mid-February. That should keep heating demand mostly low, at least when the weather is warmer than normal, and allow utilities to continue pulling less gas from storage for at least a fourth or even fifth week in a row. Gas stockpiles were currently about 5% above the five-year (2018-2022) average and are on track to rise to 7% above normal in next week's federal storage report. The biggest wild card in the gas market remains when Freeport LNG's liquefied natural gas (LNG) export plant in Texas will exit a seven-month outage caused by a fire in June 2022. The market cares about Freeport, the second biggest U.S. LNG export plant, because traders expect prices to jump once the facility starts pulling in big amounts of gas, boosting demand for the fuel. The plant can pull in about 2.1 billion cubic feet per day (bcfd) of gas and turn it into LNG. That is about 2% of what U.S. gas producers pull from the ground each day. On Thursday, federal regulators approved Freeport's plan to start cooling down parts of the plant. That is an early step in the restart process, but will not result in big gas flows anytime soon. The company still has to go back to regulators to get permission to restart the liquefaction trains that turn the gas into LNG for export. Several analysts have said they don't expect to see much LNG production at Freeport until March or later. Analysts at Goldman Sachs said in a note on Friday that they expect Freeport to restart in mid-February, but noted it would take until the end of March before all three liquefaction trains were back in operation. Week ended Week ended Year ago Five-year Jan 27 Jan 20 Jan 27 average (Forecast) (Actual) Jan 27 U.S. weekly natgas storage change (bcf): -138 -91 -261 -181 U.S. total natgas in storage (bcf): 2,591 2,729 2,361 2,420 U.S. total storage versus 5-year average +7.1 +4.9% 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 2.91 2.94 4.26 6.54 3.60 Title Transfer Facility (TTF) 17.06 17.93 28.25 40.50 14.39 Japan Korea Marker (JKM) 20.17 20.94 28.53 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 455 448 508 430 429 U.S. GFS CDDs 4 4 2 4 4 U.S. GFS TDDs 459 452 510 434 435 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 98.9 98.5 98.0 93.5 88.8 U.S. Imports from Canada 8.4 8.3 8.8 10.2 9.4 U.S. LNG Imports 0.0 0.0 0.0 0.2 0.4 Total U.S. Supply 107.3 106.8 106.8 103.9 98.6 U.S. Demand (bcfd) U.S. Exports to Canada 2.8 2.6 2.6 2.5 2.8 U.S. Exports to Mexico 5.3 5.3 5.2 6.0 5.3 U.S. LNG Exports 12.4 12.5 12.5 12.6 7.2 U.S. Commercial 14.8 16.5 18.6 20.4 17.1 U.S. Residential 24.5 27.8 31.5 35.0 29.8 U.S. Power Plant 29.5 32.2 32.8 32.3 28.5 U.S. Industrial 24.6 25.7 26.4 26.6 25.6 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.7 2.9 3.1 2.9 2.4 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 101.1 110.1 117.3 122.2 108.4 Total U.S. Demand 121.6 130.5 137.7 143.3 123.7 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jan 27 Jan 20 Jan 13 Jan 6 Dec 30 Wind 10 13 11 12 11 Solar 2 2 2 2 2 Hydro 7 7 7 7 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 39 36 38 36 35 Coal 19 18 19 18 23 Nuclear 21 21 21 23 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.72 3.09 Transco Z6 New York 2.90 3.05 PG&E Citygate 8.00 15.31 Eastern Gas (old Dominion South) 2.23 2.61 Chicago Citygate 2.78 2.97 Algonquin Citygate 3.33 4.22 SoCal Citygate 8.23 17.00 Waha Hub 2.02 2.48 AECO 2.62 2.62 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 45.00 47.75 PJM West 32.25 37.50 Ercot North 18.50 28.00 Mid C 65.00 142.25 Palo Verde 61.75 102.25 SP-5 73.50 133.00 (Reporting by Scott DiSavino; editing by Sharon Singleton and Jonathan Oatis)

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