US natural gas prices ease to 2-week low on record output, mild weather

Nov 8 (Reuters) - U.S. natural gas futures eased about 1% to a two-week low on Wednesday on record output and forecasts for mild weather through late November, keeping heating demand low and allowing utilities to continue injecting gas into storage for a couple more weeks. Front-month gas futures for December delivery on the New York Mercantile Exchange was down 3.5 cents, or 1.1%, to $3.105 per million British thermal units (mmBtu) at 9:29 a.m. EST (1429 GMT), putting the contract on track for its lowest close since Oct. 25 for a second day in a row. A bearish factor that has weighed on the futures market for much of this year has been lower spot or next-day prices at the Henry Hub benchmark in Louisiana. The spot market has traded below front-month futures for 178 out of 214 trading days so far this year, according to data from financial firm LSEG. Next-day prices at the Henry Hub dropped about 33% to $2.00 per mmBtu for Wednesday. Analysts have said that so long as the futures market stays in contango - with the second-month higher than the front-month - and spot prices remain far enough below the front-month to cover margin and storage costs, traders should be able to lock in arbitrage profits by buying spot gas, storing it and selling a futures contract. Looking ahead, the U.S. Energy Information Administration (EIA) said it would not release its weekly gas storage report on Thursday due to a planned systems upgrade. EIA will resume its regular schedule next week. In Texas, voters approved a constitutional amendment on Tuesday to fund the construction of power plants. The plan is one of several efforts by the state to avoid another energy crisis like the one caused by a deadly winter storm in February 2021 that left millions without power, water and heat for days due to the shutdown of an unusually large amount of generation. In Maine, meanwhile, voters rejected a proposal to create a public power company, called Pine Tree Power, to take over the operations of Avangrid's Central Maine Power and Enmax's Versant Power. SUPPLY AND DEMAND LSEG said average gas output in the Lower 48 U.S. states has risen to 107.0 billion cubic feet per day (bcfd) so far in November, up from a record 104.2 bcfd in October. Meteorologists projected the weather would remain mostly warmer than normal through Nov. 23. But with the weather turning seasonally cooler with the coming of winter, LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would jump from 100.6 bcfd this week to 108.8 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday. Pipeline exports to Mexico have fallen to an average of 5.4 bcfd so far in November, down from 6.5 bcfd in October and a record 7.0 bcfd in August. On a daily basis, exports to Mexico were on track to fall to an eight-month low of 4.5 bcfd on Wednesday. Analysts expect U.S. exports to Mexico to rise once U.S.-based New Fortress Energy's plant in Altamira starts pulling in U.S. gas to turn into LNG for export by the end of the year. Gas flows to the seven big U.S. LNG export plants have risen to an average of 13.8 bcfd so far in November, up from 13.7 bcfd in October and a record 14.0 bcfd in April. Week ended Week ended Year ago Five-year Nov 3 Oct 27 Nov 3 average Forecast Actual Nov 3 U.S. weekly natgas storage change (bcf): 21 79 83 36 U.S. total natgas in storage (bcf): 3,800 3,779 3,569 3,610 U.S. total storage versus 5-year average 5.3% 5.7% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2017-2021) Henry Hub 3.11 3.14 6.43 6.54 2.89 Title Transfer Facility (TTF) 14.16 14.61 35.88 40.50 7.49 Japan Korea Marker (JKM) 17.36 17.45 28.37 34.11 8.95 LSEG 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 217 220 302 259 272 U.S. GFS CDDs 12 14 17 15 12 U.S. GFS TDDs 229 234 319 274 284 LSEG 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 Production 105.6 107.0 107.1 99.4 94.4 U.S. Imports from Canada 7.2 7.5 7.6 7.3 8.3 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 113.2 114.5 114.7 106.7 102.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.0 2.3 2.3 2.3 2.9 U.S. Exports to Mexico 6.1 5.5 6.2 5.0 5.3 U.S. LNG Exports 14.2 13.8 13.6 11.6 7.9 U.S. Commercial 10.3 8.9 11.1 8.6 11.7 U.S. Residential 14.8 12.0 16.6 11.8 17.5 U.S. Power Plant 31.0 28.1 27.9 20.1 27.5 U.S. Industrial 23.9 22.6 23.4 22.7 24.3 U.S. Plant Fuel 5.2 5.3 5.3 5.2 5.2 U.S. Pipe Distribution 2.3 2.1 2.3 2.3 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 87.6 79.1 86.7 70.8 88.6 Total U.S. Demand 109.8 100.6 108.8 89.7 104.7 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 92 93 83 107 81 Jan-Jul 88 89 77 102 79 Oct-Sep 89 89 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Nov 10 Nov 3 Oct 27 Oct 20 Oct 13 Wind 11 14 10 10 Solar 4 4 4 4 Hydro 5 5 5 5 Other 1 2 2 2 Petroleum 0 0 0 0 Natural Gas 40 40 42 41 Coal 19 16 17 16 Nuclear 19 19 20 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.00 2.71 Transco Z6 New York 1.65 1.51 PG&E Citygate 3.88 4.75 Eastern Gas (old Dominion South) 1.49 1.48 Chicago Citygate 1.75 1.86 Algonquin Citygate 2.02 1.68 SoCal Citygate 7.65 8.26 Waha Hub 0.94 0.24 AECO 1.48 1.87 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 28.25 31.75 PJM West 32.75 30.00 Ercot North 77.00 36.25 Mid C 80.00 57.75 Palo Verde 54.43 38.50 SP-15 42.00 36.00 (Reporting by Scott DiSavino; Editing by Paul Simao)