(Adds latest prices) Dec 21 (Reuters) – U.S. natural gas futures held near a eight-week low on Wednesday as the market balanced extreme cold in the short term that has already cut output by freezing oil and gas wells and boosted heating demand against milder long-term forecasts that will cut heating demand. The weather is frigid now across much of the country, but if the current forecasts are right and the weather turns warmer-than-normal in late December and early January, utilities will be able to leave more gas in storage around the start of the new year. Gas stockpiles are currently about 0.4% below the five-year (2017-2021) average for this time of year. U.S. gas futures remained on track for their most volatile year ever. Both implied and historic volatility were expected to hit record highs in 2022 as soaring global gas prices fed demand for U.S. liquefied natural gas (LNG) exports due to supply disruptions and sanctions linked to Russia's war in Ukraine. Traders said the biggest uncertainty for the market remains when Freeport LNG will restart its LNG export plant in Texas. Small amounts of gas started to flow to Freeport on Tuesday for the first time since August and continued to flow on Wednesday, according to data provider Refinitiv, prompting some in the market to wonder whether the plant was close to restarting. A source familiar with the matter said Freeport was using the gas to maintain a flare system at the plant. After several delays – from October to November to December – the company has said several times this month, including on Tuesday, that the plant is on track to restart by the end of the year, pending regulatory approval. Many analysts, however, do not expect Freeport to return until the first quarter of 2023 because the company still has a lot of work to do to satisfy federal regulators. Whenever Freeport returns, U.S. demand for gas will jump. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG for export, which is about 2% of U.S. daily production. Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired to review the incident and suggest action. A couple of vessels – Prism Diversity and Prism Courage – have been waiting in the Gulf of Mexico to pick up LNG from Freeport since at least early November. Several other ships were also sailing toward the plant, including Elisa Larus, which is expected to arrive in late December, Prism Agility (early January), Kmarin Diamond (mid January) and Wilforce (late January). Point Fortin, which was heading toward Freeport, is now on track to go to Cheniere Energy Inc's Corpus Christi plant in Texas. Even without Freeport, the amount of gas flowing to U.S. LNG export plants hit 13.1 bcfd last week, the most since May 28 – 11 days before Freeport shut. That is because the nation's six other big export plants were operating near full capacity. After weeks of extreme volatility, front-month gas futures rose 0.6 cent, or 0.1%, to settle at $5.332 per million British thermal units (mmBtu). On Tuesday, the contract fell 9% to settle at its lowest since Oct. 27. Data provider Refinitiv said average gas output in the U.S. Lower 48 states eased to 99.4 bcfd so far in December, down from a monthly record of 99.5 bcfd in November. On a daily basis, output was on track to drop about 3.4 bcfd over the past nine days to a preliminary two-month low of 97.2 bcfd on Wednesday as freezing weather covers much of the country, causing well freeze-offs in Texas, Oklahoma, North Dakota and Pennsylvania. Week ended Week ended Year ago Five-year Dec 16 Dec 9 Dec 16 average (Forecast) (Actual) Dec 16 U.S. weekly natgas storage change (bcf): -93 -50 -60 -124 U.S. total natgas in storage (bcf): 3,319 3,412 3,370 3,303 U.S. total storage versus 5-year average +0.5% -0.4% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 5.42 5.33 3.86 3.73 2.89 Title Transfer Facility (TTF) 30.90 32.99 37.67 16.04 7.49 Japan Korea Marker (JKM) 34.92 36.49 37.84 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 434 443 354 411 428 U.S. GFS CDDs 3 3 15 5 4 U.S. GFS TDDs 437 446 369 416 432 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 99.8 98.5 99.0 96.3 89.8 U.S. Imports from Canada 9.1 9.2 9.5 9.2 8.9 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3 Total U.S. Supply 108.9 107.7 108.6 105.5 99.0 U.S. Demand (bcfd) U.S. Exports to Canada 3.5 2.6 2.7 3.5 3.2 U.S. Exports to Mexico 5.0 5.3 5.3 5.5 5.0 U.S. LNG Exports 12.5 12.8 12.9 12.8 6.9 U.S. Commercial 15.0 18.5 21.5 15.5 14.6 U.S. Residential 24.9 31.8 37.6 25.7 24.6 U.S. Power Plant 30.5 33.1 34.3 29.2 27.3 U.S. Industrial 24.5 26.4 27.1 24.5 24.9 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.7 3.1 3.4 3.1 2.5 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 102.7 118.0 128.8 103.0 98.9 Total U.S. Demand 123.7 138.8 149.7 124.8 114.0 U.S. weekly power generation percent by fuel – EIA Week ended Week ended Week ended Week ended Week ended Dec 23 Dec 16 Dec 9 Dec 2 Nov 25 Wind 11 12 9 15 9 Solar 2 2 2 2 2 Hydro 6 6 6 6 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 36 37 39 35 39 Coal 24 20 20 19 20 Nuclear 19 20 21 21 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 5.28 6.08 Transco Z6 New York 7.45 8.46 PG&E Citygate 24.98 41.26 Dominion South 4.78 4.92 Chicago Citygate 5.39 6.13 Algonquin Citygate 10.37 13.00 SoCal Citygate 27.14 36.50 Waha Hub 3.92 5.09 AECO 5.10 5.67 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 123.25 151.00 PJM West 65.25 91.75 Ercot North 34.50 46.75 Mid C 264.75 302.25 Palo Verde 264.00 311.50 SP-15 269.75 307.25 (Reporting by Scott DiSavino; Editing by Kirsten Donovan and Jonathan Oatis)
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