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U.S. natgas falls 3% as storm cuts power use ahead of storage report

Sept 29 (Reuters) - U.S. natural gas futures slid about 3% on Thursday after Hurricane Ian knocked out power to over 2.5 million customers in Florida, reducing the amount of gas generators need to produce electricity, and on forecasts for mild weather over the next two weeks. That price decline came ahead of a federal report expected to show that last week's storage build was bigger than usual as an increase in wind power allowed generators to cut back on the amount of gas they burned to produce electricity. Wind power produced about 10% of the nation's electricity last week, up from as little as 6% earlier in the month, according to federal energy data. Analysts forecast that U.S. utilities added 94 billion cubic feet (bcf) of gas to storage during the week ended Sept. 23. That compares with an increase of 77 bcf in the same week last year and a five-year (2017-2021) average increase of 86 bcf. If correct, last week's increase would push stockpiles to 2.968 trillion cubic feet (tcf), or 9.6% below the five-year average of 3.283 tcf for this time of the year. Analysts said hurricanes like Ian tend to cut demand for gas rather than supplies of the fuel since they usually knock out power and can cause liquefied natural gas (LNG) export terminals to shut. Only about 2% of U.S. gas production comes from the federal offshore Gulf of Mexico, with most coming from shale basins like the Permian in West Texas and the Marcellus in Pennsylvania. In its latest advisory, the U.S. National Hurricane Center said Ian, now a tropical storm, was expected to produce life-threatening flooding, storm surge and gusty winds across portions of Florida, Georgia and the Carolinas as it heads north. The center of the storm was located about 40 miles (70 kilometers) east of Orlando, Florida, at 8 a.m. EDT (1200 GMT) and was packing maximum sustained winds of 65 miles per hour. In other hurricane news, about 239,000 customers in Puerto Rico still lacked power, as did 78,500 in Nova Scotia after Hurricane Fiona battered the U.S. island on Sept. 18 and the Canadian province on Sept. 24. Also weighing on gas prices, demand was expected to decline in October when the Cove Point LNG plant in Maryland shuts for a couple weeks of maintenance. Cove Point consumes about 0.8 billion cubic feet per day (bcfd) of gas. U.S. gas use has already been reduced for months by the outage at the Freeport LNG export plant in Texas, the second-biggest U.S. LNG export plant. It was consuming about 2 bcfd of gas before it shut on June 8. Freeport LNG expects the facility to return to at least partial service in early to mid-November. On its first day as the front-month, gas futures for November delivery fell 18.8 cents, or 2.7%, to $6.767 per million British thermal units (mmBtu) at 9:26 a.m. EDT (1326 GMT). Despite recent declines, U.S. futures were still up about 81% so far this year as global gas prices have soared, feeding demand for U.S. exports due to supply disruptions and sanctions linked to Russia's Feb. 24 invasion of Ukraine. Gas was trading around $53 per mmBtu in Europe and $41 in Asia. That was a 5% decline for prices in Europe. Russian gas exports via the three main lines into Germany - Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route - have averaged just 1.3 bcfd so far in September, down from 2.5 bcfd in August and 10.8 bcfd in September 2021. Week ended Week ended Year ago Five-year Sep 23 Sep 16 Sep 23 average (Forecast) (Actual) Sep 23 U.S. weekly natgas storage change (bcf): +94 +103 +86 +77 U.S. total natgas in storage (bcf): 2,968 2,874 3,157 3,283 U.S. total storage versus 5-year average -9.6% -10.4% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 6.89 6.96 5.11 3.73 2.89 Title Transfer Facility (TTF) 54.17 57.20 22.61 16.04 7.49 Japan Korea Marker (JKM) 41.21 42.47 23.35 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 75 63 24 63 87 U.S. GFS CDDs 62 70 89 85 66 U.S. GFS TDDs 137 133 113 148 153 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 98.3 98.6 99.0 93.5 87.0 U.S. Imports from Canada 8.0 7.9 7.7 8.3 7.7 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 106.2 106.6 106.8 101.8 95.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.1 1.9 1.9 2.0 2.4 U.S. Exports to Mexico 5.5 5.9 5.6 5.7 5.3 U.S. LNG Exports 11.5 11.8 11.4 10.3 4.9 U.S. Commercial 4.8 5.3 5.5 5.0 4.9 U.S. Residential 3.9 5.0 5.2 4.3 3.9 U.S. Power Plant 36.4 33.0 30.9 29.8 33.2 U.S. Industrial 21.3 21.6 21.5 20.7 21.2 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 1.9 1.9 1.9 1.9 2.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 73.3 71.9 69.9 66.7 70.3 Total U.S. Demand 92.4 91.4 88.7 84.7 82.9 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Sep 30 Sep 23 Sep 16 Sep 9 Sep 2 Wind 9 10 8 6 7 Solar 4 3 3 3 3 Hydro 5 5 5 6 5 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 41 41 42 45 44 Coal 18 19 19 21 21 Nuclear 21 19 19 18 17 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 6.59 6.83 Transco Z6 New York 4.72 4.90 PG&E Citygate 7.23 7.80 Dominion South 4.78 4.89 Chicago Citygate 5.11 5.43 Algonquin Citygate 5.25 4.96 SoCal Citygate 6.58 8.39 Waha Hub 4.06 3.25 AECO 4.23 4.00 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 50.50 53.00 PJM West 61.50 68.25 Ercot North 53.50 50.00 Mid C 62.25 68.50 Palo Verde 63.75 95.00 SP-15 67.50 96.00 (Reporting by Scott DiSavino; Editing by Mark Porter)