UPDATE 1-U.S. natgas futures drop 8% to 18-month low on forecasts for less demand

(Adds closing prices) Jan 18 (Reuters) - U.S. natural gas futures plunged about 8% to an 18-month low on Wednesday on forecasts for less heating demand in late January than previously expected. Adding to the price drop, a growing number of analysts have said they do not expect Freeport LNG's export plant in Texas to restart until February or later even though the company has said repeatedly that the liquefied natural gas (LNG) plant was on track to exit its seven-month outage in the second half of January, pending regulatory approvals. Whenever Freeport returns, demand for U.S. gas will jump, which should cause prices to rise. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG, which is about 2% of U.S. daily production. Front-month gas futures for February delivery fell 27.5 cents, or 7.7%, to settle at $3.311 per million British thermal units (mmBtu), their lowest close since June 22, 2021. That price drop pushed the contract back into technically oversold territory with a relative strength index (RSI) below 30 for the 12th time in 14 days. It also continues the record volatility seen last year, with the contract now up or down over 5% on six of the 11 trading days in 2023. With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would jump from 121.4 bcfd this week to 128.7 bcfd next week. The forecast for next week was lower than Refinitiv's outlook on Tuesday. However, some market participants gave up hope that extreme cold will bring massive price spikes later this winter and the premium on March futures over April , which the industry calls the widow maker, fell to a record low of 2 cents per mmBtu. "The last contract on the winter strip (March) should never trade at a discount to the first month on the summer strip (April) ... but that is what is threatening," Bob Yawger, director of energy futures at Mizuho, said last week. The industry uses the March-April spread to bet on the winter heating season when demand for gas peaks. It calls the spread the "widow maker" because rapid price moves resulting from changing weather forecasts have forced some speculators out of business. Among them was the Amaranth hedge fund, which lost more than $6 billion on gas futures in 2006. Traders said the biggest market uncertainty remains when the Freeport plant will return after shutting due to a fire on June 8, 2022. Gas started flowing to the Freeport plant on Jan. 14, according to data from Refinitiv, but was only being used to maintain the flare system, according to a source familiar with the plant. Although Freeport LNG says the plant is still on track to restart in the second half of January, pending regulatory approvals, that restart timeline has been delayed many times from October to November to December and most recently to January. Freeport has not yet filed a request with federal regulators to restart the plant, according to a source familiar with the company's filings. Even when the company was saying the plant could restart last year, many analysts said it would likely take Freeport until the first or second quarter of 2023 to get the plant ready due to the large amount of work needed to satisfy federal regulators, including training staff in new safety procedures. Even though some vessels have turned away from Freeport in recent weeks, a few tankers, including Prism Diversity, Prism Courage and Prism Agility, were still waiting in the Gulf of Mexico to pick up LNG from the plant. Some have been there since early November. Week ended Week ended Year ago Five-year Jan 13 Jan 6 Jan 13 average (Forecast) (Actual) Jan 13 U.S. weekly natgas storage change (bcf): -71 +11 -156 -203 U.S. total natgas in storage (bcf): 2,831 2,902 2,839 2,786 U.S. total storage versus 5-year average +1.6% -1.4% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2018-2022) Henry Hub 3.39 3.59 4.26 6.54 3.60 Title Transfer Facility (TTF) 22.01 17.26 28.25 40.50 14.39 Japan Korea Marker (JKM) 22.73 26.81 28.53 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 429 433 426 438 443 U.S. GFS CDDs 2 3 1 3 3 U.S. GFS TDDs 431 436 427 441 446 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 98.7 98.9 99.0 93.2 88.8 U.S. Imports from Canada 8.6 8.6 9.1 10.2 9.4 U.S. LNG Imports 0.0 0.0 0.0 0.2 0.4 Total U.S. Supply 107.2 107.4 108.2 103.6 98.6 U.S. Demand (bcfd) U.S. Exports to Canada 2.7 2.9 2.9 2.3 2.8 U.S. Exports to Mexico 5.4 5.3 5.2 5.9 5.3 U.S. LNG Exports 12.3 12.2 11.8 12.9 7.2 U.S. Commercial 14.7 14.8 16.5 19.8 17.1 U.S. Residential 23.7 24.4 27.6 33.9 29.8 U.S. Power Plant 29.7 29.6 31.2 30.9 28.5 U.S. Industrial 24.6 24.6 25.6 26.2 25.6 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.7 2.7 2.9 2.7 2.4 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 100.3 101.1 108.8 118.5 108.4 Total U.S. Demand 120.7 121.4 128.7 139.6 123.7 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jan 20 Jan 13 Jan 6 Dec 30 Dec 23 Wind 15 11 12 11 9 Solar 2 2 2 2 2 Hydro 7 7 7 6 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 36 38 36 35 37 Coal 18 19 18 23 24 Nuclear 21 21 23 19 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 3.43 3.43 Transco Z6 New York 2.97 3.80 PG&E Citygate 22.15 16.08 Eastern Gas (old Dominion South) 2.58 2.58 Chicago Citygate 3.13 3.05 Algonquin Citygate 4.08 7.00 SoCal Citygate 23.50 21.00 Waha Hub 1.77 0.75 AECO 2.98 2.77 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 60.50 72.75 PJM West 42.50 50.25 Ercot North 17.50 16.25 Mid C 167.30 131.00 Palo Verde 133.50 117.50 SP-5 180.50 150.50 (Reporting by Scott DiSavino; Editing by Paul Simao)