UPDATE 1-US natgas prices jump 5% on signs Freeport LNG restarted, colder forecasts

Adds latest prices in paragraphs 1 and 3

By Scott DiSavino

Jan 22 (Reuters) - U.S. natural gas futures climbed about 5% on Wednesday on signs Freeport LNG's export plant in Texas may be preparing to exit an outage and on forecasts for colder weather over the next two weeks than previously expected, which should boost heating demand for the fuel.

Temperatures across the country averaged their lowest in at least five years on Tuesday, pushing demand for gas to new daily record highs on Monday and Tuesday while spot power and gas prices rose to multi-year highs in several parts of the country.

Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange rose 20.4 cents, or 5.4%, to settle at $3.960 per million British thermal units (mmBtu). On Tuesday, the contract closed at its lowest level since Jan. 9.

Analysts projected energy firms would pull over 200 billion cubic feet (bcf) of gas out of storage for a second and third week in a row during the weeks ending Jan. 17 and Jan. 24 to meet soaring heating demand. That drawdown would erase a small surplus of gas, measured over a five-year average, in inventory for the first time since January 2022. EIA/GAS NGAS/POLL

Some analysts said storage withdrawals in January could top the current monthly record high of 994 bcf set in January 2022, according to federal energy data.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell from 104.2 billion cubic feet per day (bcfd) in December to 102.0 bcfd so far in January, due mostly to freezing oil and gas wells and pipes, known as freeze-offs. That compares with a monthly record of 104.5 bcfd in December 2023.

On a daily basis, production was on track to climb by around 1.8 bcfd to a preliminary 99.3 bcfd on Wednesday after freeze-offs caused output to drop by 6.3 bcfd over the prior four days to a one-year low of 97.5 bcfd on Tuesday.

Freeze-offs so far this winter have been relatively small. In past years, freeze-offs cut gas output by roughly 8.1 bcfd from Jan. 9-16 in 2024, 4.6 bcfd from Jan. 31-Feb. 1 in 2023, 15.8 bcfd from Dec. 20-24 in 2022, and 20.4 bcfd from Feb. 8-17 in 2021, according to LSEG data.

Meteorologists projected that weather in the Lower 48 states would remain colder than normal through Jan. 27 before turning seasonally cold from Jan. 28 through at least Feb. 6.

Jan. 21 was the coldest day on average across the country in at least five years, according to LSEG weather data going back to 2020.

With less cold weather coming next week, LSEG forecast average gas demand in the Lower 48 states, including exports, would fall from 153.3 bcfd this week to 142.3 bcfd next week. The latest demand forecast for this week was higher than LSEG's outlook on Tuesday, while its forecast for next week was lower.

On a daily basis, LSEG said total gas use peaked at 173.3 bcfd on Jan. 20 and 179.7 bcfd on Jan. 21, easily topping the prior daily record high of 168.4 bcfd on Jan. 16, 2024.

The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.0 bcfd so far in January, up from 14.4 bcfd in December. That compares with a monthly record high of 14.7 bcfd in December 2023.

On a daily basis, however, LNG feedgas dropped by 2.3 bcfd to a six-week low of 13.3 bcfd on Tuesday due mostly to the shutdown of Freeport LNG's 2.1-bcfd export plant in Texas after a power feed problem during a rare winter storm along the Gulf Coast. Gas flows to Freeport were on track to rise to 0.3 bcfd on Wednesday.

The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine in February 2022.

Gas was trading near a 14-month high of around $15 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1, partly due to the Freeport outage. NG/EU

(Reporting by Scott DiSavino
Editing by Bernadette Baum and Nia Williams)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))

For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.

For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal

For graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C