UPDATE 1-U.S. natgas drops to near 25-month low despite return of Freeport LNG exports

(Adds latest prices) By Scott DiSavino Feb 13 (Reuters) - U.S. natural gas futures dropped by about 4% to a near 25-month low on Monday on rising output and forecasts for milder weather and less heating demand over the next two weeks than previously expected. That price decline came even though U.S. liquefied natural gas (LNG) exports to other countries were on track to jump to their highest since May 2022 after a vessel picked up a cargo from Freeport LNG's long-idled export plant in Texas. Freeport, the second biggest U.S. LNG export plant, shut in a fire in June 2022. The company, which started producing LNG in one of its three liquefaction trains, asked federal regulators on Monday for permission to restart commercial operations at the plant. Front-month gas futures for March delivery fell 10.9 cents, or 4.3%, to settle at $2.405 per million British thermal units (mmBtu). That was just one cent over its $2.396 per mmBtu settle on Feb. 8, which was its lowest close since December 2020. Gas flows to Freeport were on track to reach 0.5 billion cubic feet per day (bcfd) on Monday, up from an average of 43 million cubic feet per day since Jan. 26 when federal regulators approved the company's plan to start cooling parts of the plant. That is still only a fraction of the roughly 2.1 bcfd of gas Freeport can pull in to make LNG when operating at full power. Energy regulators and analysts have said Freeport will likely not return to full capacity until mid March or later. A couple of Freeport's customers - Japan's JERA and Osaka Gas - have said they do not expect to get LNG from the plant until after March. With the amount of gas flowing to Freeport rising the average amount of feedgas going to U.S. LNG export plants climbed to 12.7 bcfd so far in February, up from 12.3 bcfd in January. That compares with a monthly record of 12.9 bcfd in March 2022 before Freeport shut. On a daily basis, however, LNG feedgas was on track to reach 13.3 bcfd on Monday, the most in a day since May 2022 before Freeport shut in June 2022. The seven big U.S. export plants, including Freeport, can turn about 13.8 bcfd of gas into LNG. U.S. GAS OUTPUT Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 97.0 bcfd so far in February, down from 98.3 bcfd in January. That compares with a monthly record of 99.8 bcfd in November 2022. On a daily basis, however, production hit a two-week high of 98.6 bcfd on Saturday as oil and gas wells return to service after freezing earlier in the month in several states, including Texas, New Mexico, Oklahoma and Pennsylvania. The energy industry calls output declines from freezing wells freeze-offs. Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 28 except for a few cold days around Feb. 17-18 and Feb. 23-25. With three cold days expected next week versus just two this week, Refinitiv forecast U.S. gas demand, including exports, would rise from 119.2 bcfd this week to 122.6 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Friday. Energy analysts, however, noted that colder than normal weather in late February does not boost heating demand by as much as cold in late January. The 30-year average temperature in the U.S. Lower 48 states is about 37 degrees Fahrenheit (3 Celsius) on Jan. 25 versus 42 F on Feb. 25, according to data provider Refinitiv. Week ended Week ended Year ago Five-year Feb Feb 3 Feb 10 average 10(Forecast) (Actual) Feb 10 U.S. weekly natgas storage change (bcf): -115 -217 -195 -166 U.S. total natgas in storage (bcf): 2,251 2,366 1,938 2,083 U.S. total storage versus 5-year average 8.1% +5.2% 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 2.44 2.51 4.46 6.54 3.60 Title Transfer Facility (TTF) 16.34 16.81 26.94 40.50 14.39 Japan Korea Marker (JKM) 17.99 17.92 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 358 367 417 386 383 U.S. GFS CDDs 6 5 9 7 6 U.S. GFS TDDs 364 372 416 393 389 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 96.9 98.5 98.5 94.6 87.7 U.S. Imports from Canada 8.4 8.0 8.4 9.8 9.1 U.S. LNG Imports 0.1 0.1 0.0 0.1 0.2 Total U.S. Supply 105.4 106.5 106.9 104.5 97.0 U.S. Demand (bcfd) U.S. Exports to Canada 2.8 3.1 3.1 2.9 2.7 U.S. Exports to Mexico 5.1 5.2 5.2 5.7 5.2 U.S. LNG Exports 12.6 13.0 12.2 13.0 6.6 U.S. Commercial 16.0 13.9 14.9 16.9 16.4 U.S. Residential 26.5 22.7 24.6 27.6 27.7 U.S. Power Plant 30.1 29.4 30.2 26.5 28.1 U.S. Industrial 24.7 24.3 24.5 25.3 25.2 U.S. Plant Fuel 4.8 4.9 4.9 4.9 4.8 U.S. Pipe Distribution 2.8 2.6 2.7 2.6 3.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 104.9 97.9 102.0 103.9 105.4 Total U.S. Demand 125.4 119.2 122.6 125.5 119.9 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended eek ended Feb 17 Feb 10 Feb 3 Jan 27 Jan 20 Wind 10 15 10 11 13 Solar 3 3 2 2 2 Hydro 7 6 7 7 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 41 36 39 38 36 Coal 15 17 21 19 18 Nuclear 22 21 19 21 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.37 2.40 Transco Z6 New York 2.05 2.05 PG&E Citygate 5.72 5.71 Eastern Gas (old Dominion South) 1.91 1.89 Chicago Citygate 2.30 2.34 Algonquin Citygate 2.75 2.35 SoCal Citygate 6.00 5.45 Waha Hub 1.52 2.03 AECO 1.93 1.93 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 30.75 27.00 PJM West 27.25 27.75 Ercot North 25.50 25.50 Mid C 54.78 60.60 Palo Verde 44.75 42.25 SP-5 46.25 40.50 (Reporting by Scott DiSavino Editing by Marguerita Choy)