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U.S. natgas futures jump 7% on forecasts for colder weather

Jan 23 (Reuters) - U.S. natural gas futures jumped about 7% on Monday from a 19-month low in the prior session on forecasts for colder weather and higher heating demand over the next two weeks than previously expected. That price increase came even though many in the market believe the United States has more than enough gas in storage for the rest of the winter and growing expectations that Freeport LNG's liquefied natural gas (LNG) export plant in Texas will not return to service until February or later. Freeport LNG, meanwhile, has said repeatedly that the plant is on track to restart in the second half of January, pending regulatory approvals. Analysts, however, don't believe that timeline because the company has already delayed its planned restart many times from October to November to December and most recently to January. Even when the company was saying the plant could restart in 2022, many analysts projected it would likely take Freeport until the first or second quarter of 2023 to get the plant ready due to the large amount of work needed to satisfy federal regulators, including training staff in new safety procedures. The market cares about Freeport because prices will likely jump once it returns to service as demand for gas rises. The facility, which shut in a fire on June 8, 2022, can pull in around 2.1 billion cubic feet per day (bcfd) of gas and turn it into LNG when operating at full power. That is about 2% of U.S. daily production. U.S. gas stockpiles were about 1% above the five-year (2018-2022) average for this time of year. Analysts expect the U.S. Energy Information Administration will report this week that the amount of gas in storage rose to about 5% above normal. Front-month gas futures for February delivery rose 22.6 cents, or 7.1%, to $3.400 per million British thermal units (mmBtu) at 9:23 a.m. EST (1423 GMT). On Friday, the contract closed at its lowest since June 10, 2021. But with prices down about 52% over the past five weeks, gas speculators last week boosted their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges to the most since March 2020, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. Shares outstanding in the U.S. Natural Gas Fund, an exchange-traded fund (ETF) designed to track the daily price movement of gas, hit 55.2 million on Friday, its fourth record high in a row, according to Refinitiv data. Purchases of UNG so far this year have already hit three of the top 10 biggest daily share purchases on record. With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would jump from 130.8 bcfd this week to 139.9 bcfd next week. Those forecasts were higher than Refinitiv's outlook on Friday. Traders said the biggest uncertainty in the market remains when the Freeport plant will return. Even though vessels have turned away from Freeport in recent weeks, several tankers were waiting in the Gulf of Mexico to pick up LNG from the plant, including Prism Diversity since around Oct. 28, Prism Courage since around Nov. 4, Prism Agility since around Jan. 2 and Corcovado LNG since around Jan. 15. In addition, other ships were sailing toward Freeport with both Prism Brilliance and Kmarin Diamond expected to arrive around Jan. 29. In other LNG news, the Cadiz Knutsen was expected to arrive at Constellation Energy Corp's Everett LNG terminal in Massachusetts over the next day or two with a fourth cargo of the super-cooled fuel from Trinidad this winter. Cadiz Knutsen also delivered LNG to Everett in November and December and early January. Week ended Week ended Year ago Five-year Jan 20 Jan 13 Jan 20 average (Forecast) (Actual) Jan 20 U.S. weekly natgas storage change (bcf): -78 +82 -217 -185 U.S. total natgas in storage (bcf): 2,742 2,820 2,622 2,601 U.S. total storage versus 5-year average +5.4% +1.2% 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 3.48 3.17 4.26 6.54 3.60 Title Transfer Facility (TTF) 20.42 20.30 28.25 40.50 14.39 Japan Korea Marker (JKM) 22.82 22.95 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 490 459 508 430 436 U.S. GFS CDDs 3 3 2 4 3 U.S. GFS TDDs 493 462 510 434 439 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 99.0 99.2 93.2 88.8 U.S. Imports from Canada 8.4 8.4 9.3 10.2 9.4 U.S. LNG Imports 0.0 0.0 0.0 0.2 0.4 Total U.S. Supply 107.3 107.4 108.5 103.6 98.6 U.S. Demand (bcfd) U.S. Exports to Canada 2.8 2.7 2.7 2.3 2.8 U.S. Exports to Mexico 5.3 5.2 5.2 5.9 5.3 U.S. LNG Exports 12.4 12.5 12.0 12.9 7.2 U.S. Commercial 14.8 16.5 19.3 19.8 17.1 U.S. Residential 24.5 28.0 32.8 33.9 29.8 U.S. Power Plant 29.5 32.4 33.1 30.9 28.5 U.S. Industrial 24.6 25.6 26.6 26.2 25.6 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.7 2.7 3.2 2.7 2.4 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 101.1 110.5 120.1 118.5 108.4 Total U.S. Demand 121.6 130.8 139.9 139.6 123.7 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 9 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 22 21 21 23 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 3.15 32.91 Transco Z6 New York 3.30 2.95 PG&E Citygate 14.93 15.07 Eastern Gas (old Dominion South) 2.66 2.44 Chicago Citygate 3.06 2.95 Algonquin Citygate 3.89 5.20 SoCal Citygate 14.76 17.03 Waha Hub 0.51 1.89 AECO 2.80 2.78 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 39.75 49.25 PJM West 38.50 42.00 Ercot North 21.50 18.00 Mid C 135.00 169.00 Palo Verde 100.00 125.25 SP-5 125.00 145.00 (Reporting by Scott DiSavino; Editing by Emelia Sithole-Matarise)