U.S. natgas rises 2% on colder weather view, short-covering

Feb 22 (Reuters) - U.S. natural gas futures rose more than 2% on Wednesday on forecasts for colder weather than previously expected and as investors covered short positions following steep declines. Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) were up 4.4 cents, or 2.1%, to $2.12 per million British thermal units (mmBtu) by 09:55 a.m. EST (1455 GMT). Prices briefly dipped below the $2 per mmBtU level for the first time since September 2020 in overnight trading. U.S. natgas prices have fallen nearly 80% since scaling above $10 last August. "Speculators have been the best sellers. There's only one way for speculators to take a profit on a short position, and that's they got to buy it back," said Thomas Saal, senior vice president for energy at StoneX Financial Inc. Supply is adequate, it's just that the demand has been poor because of the warm weather that has bought down natural gas prices to the levels that haven't been seen in a few years, Saal added. Data provider Refinitiv estimated 347 heating degree days (HDDs) over the next two weeks in the lower 48 U.S. states, up from a forecast of 341 HDDs on Tuesday. The normal for this time of year is 350 HDDs. HDDs estimate demand to heat homes and businesses by measuring the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). On the supply side, Refinitiv said average gas output in the U.S. Lower 48 states was at 97.4 billion cubic feet per day (bcfd) so far in February, down from 98.3 bcfd in January after extreme cold froze oil and gas wells in several producing basins earlier in February. That compared with a monthly record of 99.8 bcfd in November 2022. Refinitiv forecast U.S. gas demand, including exports, would rise from 119.4 bcfd this week to 120.6 bcfd next week. "Even with a demand uptick, growth in gas supply may likely present an oversupply scenario as early as 2Q 2023," said Ade Allen, Rystad Energy's New York-based gas markets analyst. "Our short-term outlook continues to signal a bearish sentiment, despite the restart of Freeport LNG." On Tuesday, federal regulators approved the partial restart of Freeport LNG's export plant in Texas, including two liquefaction trains, two tanks, and one loop and dock each. The second-biggest U.S. LNG export plant was on track to pull in about 0.5 bcfd of gas from pipelines for the tenth day in a row on Wednesday, according to Refinitiv. Freeport LNG, when operating at full power, can turn about 2.1 bcfd of gas into LNG for export. Energy regulators and analysts, however, have said they do not expect Freeport LNG to return to full commercial operation until mid-March or later. A recovery in European gas storage levels has also moderated the demand outlook for U.S. exports. Week ended Week ended Year ago Five-year Feb 17 Feb 10 Feb 17 average (Forecast) (Actual) Feb 17 U.S. weekly natgas -71 -100 -138 -177 storage change (bcf): U.S. total natgas in 2,195 2,266 1,800 1,906 storage (bcf): U.S. total storage 15.2% +8.8% versus 5-year average Global Gas Benchmark Current Day Prior Day This Month Prior Year Five Year Futures ($ per mmBtu) Last Year Average Average 2022 (2018-2022) Henry Hub 2.07 2.27 4.46 6.54 3.60 Title Transfer Facility 15.88 16.60 26.94 40.50 14.39 (TTF) Japan Korea Marker (JKM) 14.3 15.92 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 347 341 380 350 U.S. GFS CDDs 17 15 6 8 U.S. GFS TDDs 364 356 386 358 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry 98.3 98.0 98.2 87.7 Production U.S. Imports from Canada 7.8 7.8 8.2 9.1 U.S. LNG Imports 0.0 0.0 0.0 0.2 Total U.S. Supply 106.1 105.8 106.4 97 U.S. Demand (bcfd) U.S. Exports to Canada 3.1 2.8 2.8 2.7 U.S. Exports to Mexico 5.2 5.3 5.1 5.2 U.S. LNG Exports 13.1 13.0 12.2 6.6 U.S. Commercial 13.7 13.8 14.3 16.4 U.S. Residential 22.2 22.4 23.6 27.7 U.S. Power Plant 28.7 30.5 31.0 28.1 U.S. Industrial 24.2 24.0 23.9 25.2 U.S. Plant Fuel 4.9 4.8 4.9 4.8 U.S. Pipe Distribution 2.6 2.6 2.7 3.1 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 Total U.S. Consumption 96.4 98.3 100.5 105.4 Total U.S. Demand 117.8 119.4 120.6 119.9 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Feb 24 Feb 17 Feb 10 Feb 3 Jan 27 Wind 16 15 15 10 11 Solar 3 3 3 2 2 Hydro 7 7 6 7 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 37 37 36 39 38 Coal 14 15 17 21 19 Nuclear 21 21 21 19 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.12 2.28 Transco Z6 New York 1.85 2.01 PG&E Citygate 7.21 6.37 Eastern Gas (old 1.63 1.80 Dominion South) Chicago Citygate 2.12 2.19 Algonquin Citygate 2.29 2.59 SoCal Citygate 7.48 6.6 Waha Hub 1.33 1.60 AECO 2.54 2.52 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 28.50 37.50 PJM West 28.50 24.50 Ercot North 15.50 20.00 Mid C 76.50 54.88 Palo Verde 38.50 39.75 SP-5 44.25 45.50 (Reporting by Rahul Paswan and Brijesh Patel in Bengaluru Editing by Mark Potter)