U.S. natgas slides 7% to over two-year low on warmer weather outlook

Feb 21 (Reuters) - U.S. natural gas futures dropped 7% to a near 29-month low on Tuesday, weighed down by forecasts for milder weather and lower heating demand next week than previously expected. Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) fell 16.0 cents, or 7%, to $2.12 per million British thermal units by 1508 a.m. EST (1404 GMT), their lowest level since September 2020. Data provider Refinitiv estimated 341 heating degree days (HDDs) over the next two weeks in the lower 48 U.S. states. The normal is 405 HDDs for this time of year. HDDs estimate demand to heat homes and businesses by measuring the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). "What we are seeing here and the expectations are that we're going to get through winter without any supply issues," said Phil Flynn, senior analyst at Price Futures Group in Chicago, adding "from a weather viewpoint, right now production seems to be exceeding demand." "Other thing is that even though Freeport's (Texas plant) is on the road to reopening, it still might be March before we start getting to the point where they're going to be exporting any supply and at that point winter is pretty much over." Refinitiv said average gas output in the U.S. Lower 48 states fell from 98.3 bcfd in January to 97.4 bcfd so far in February, after extreme cold earlier in February froze oil and gas wells in several producing basins. That compared with a monthly record of 99.8 bcfd in November 2022. Refinitiv forecast U.S. gas demand, including exports, would rise from 118.9 billion cubic feet (bcf) this week to 122.6 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Friday. "Mild weather and strong production growth caused the balances to flip, with inventories recently rising above seasonal norms," analysts at Bank of America said in a note dated Monday. Freeport LNG, the second-biggest U.S. LNG export plant, was on track to pull in about 0.5 bcfd of gas from pipelines for a ninth day in a row on Tuesday, according to Refinitiv. When operating at full power, Freeport LNG can turn about 2.1 bcfd of gas into LNG for export. The first cargo of liquefied natural gas (LNG) headed to Europe from the Freeport facility in the United States on Friday since a fire halted operations in June, will be unloaded at Germany's new Wilhelmshaven terminal, as per Refinitiv Eikon data. Last week, Freeport LNG asked federal regulators for permission to put the first phase of its restart plan into commercial operation. Phase 1 includes the full operation of the plant's three liquefaction trains, which turn gas into LNG, two storage tanks and one LNG loading dock. Energy regulators and analysts, however, have said they do not expect Freeport LNG to return to full commercial operation until mid-March or later. Week ended Week ended Year ago Five-year Feb 17 Feb 10 Feb 17 average (Forecast) (Actual) Feb 17 U.S. weekly natgas storage change (bcf): -71 -100 -138 -177 U.S. total natgas in storage (bcf): 2,195 2,266 1,800 1,906 U.S. total storage versus 5-year average 15.2% +8.8% 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 2.27 2.34 4.46 6.54 3.60 Title Transfer Facility (TTF) 16.60 15.43 26.94 40.50 14.39 Japan Korea Marker (JKM) 15.92 16.30 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 341 360 388 403 405 U.S. GFS CDDs 15 12 5 6 5 U.S. GFS TDDs 356 372 393 409 410 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 98.3 97.9 98.2 87.7 U.S. Imports from Canada 7.8 7.8 8.2 9.1 U.S. LNG Imports 0.0 0.0 0.0 0.2 Total U.S. Supply 106.1 105.8 106.3 97 U.S. Demand (bcfd) U.S. Exports to Canada 3.1 2.8 2.8 2.7 U.S. Exports to Mexico 5.2 5.2 5.2 5.2 U.S. LNG Exports 13.1 13.2 12.4 6.6 U.S. Commercial 13.7 13.8 14.9 16.4 U.S. Residential 22.2 22.3 24.6 27.7 U.S. Power Plant 28.7 30.1 30.8 28.1 U.S. Industrial 24.2 24.0 24.2 25.2 U.S. Plant Fuel 4.9 4.8 4.8 4.8 U.S. Pipe Distribution 2.6 2.6 2.7 3.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 Total U.S. Consumption 96.4 97.7 102.2 105.4 Total U.S. Demand 117.8 118.9 122.6 119.9 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Feb 24 Feb 17 Feb 10 Feb 3 Jan 27 Wind 16 15 15 10 11 Solar 3 3 3 2 2 Hydro 7 7 6 7 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 37 37 36 39 38 Coal 14 15 17 21 19 Nuclear 21 21 21 19 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.28 2.48 Transco Z6 New York 2.01 2.22 PG&E Citygate 6.37 7.11 Eastern Gas (old Dominion South) 1.80 2.05 Chicago Citygate 2.19 2.43 Algonquin Citygate 2.59 2.75 SoCal Citygate 6.6 7.14 Waha Hub 1.60 2.20 AECO 2.52 1.99 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 37.50 40.75 PJM West 24.50 35.50 Ercot North 20.00 33.50 Mid C 54.88 82.50 Palo Verde 39.75 71.25 SP-5 45.50 72.75 (Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; Editing by Sharon Singleton)