US natgas prices edge up ahead of storage report on cooler Feb forecasts

By Scott DiSavino

Jan 30 (Reuters) - U.S. natural gas futures edged up about 1% on Thursday on forecasts calling for cooler weather in mid February that should boost heating demand.

That price increase came despite forecasts for milder weather and lower demand next week than previously expected, and ahead of a federal storage report expected to show a massive withdrawal during extreme cold last week.

Analysts projected utilities pulled 314 billion cubic feet (bcf) of gas out of storage during the week ended Jan. 24.

That compares with a drop of 234 bcf during the same week last year and a five-year average draw of 189 bcf for this time of year. EIA/GAS NGAS/POLL

If correct, that would only be the fourth time utilities pulled over 300 bcf of gas out of storage in a week, but would fall short of the record 359 bcf withdrawn during a freezing week in January 2018.

Analysts noted last week's decline should erase the small surplus of gas still in storage over the five-year average for the first time since January 2022, and could boost total withdrawals for the month to a record high. The current record monthly storage withdrawal is 994 bcf in January 2022, according to federal energy data.

On its first day as the front-month, gas futures NGc1 for March delivery on the New York Mercantile Exchange rose 3.6 cents, or 1.1%, from where that contract closed on Wednesday to $3.206 per million British thermal units (mmBtu) at 8:04 a.m. EST (1304 GMT).

The contract, however, was still on track to settle at its lowest since Dec. 10 because the new March front-month was still down about 10% from where the higher-priced February contract expired on Wednesday when it was still the front-month.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states fell from 103.8 billion cubic feet per day (bcfd) in December to 102.3 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 104.6 bcfd in December 2023.

Freeze-offs from Jan. 18-21 cut output by 6.9 bcfd to a one-year low of 96.9 bcfd on Jan. 21. All of that curtailed output was back in service by Jan. 29.

Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through Feb. 7, before turning mostly near normal from Feb. 8-14.

With mild weather coming, LSEG forecasts average gas demand in the Lower 48 states, including exports, would fall from 136.8 bcfd this week to 124.7 bcfd next week. The forecast for next week was lower than LSEG's outlook on Wednesday.

On a daily basis, LSEG said total gas use during last week's extreme cold peaked at 173.3 bcfd on Jan. 20 and 181.2 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 14.6 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.

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

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