UPDATE 1-US natgas prices jump 4% on Freeport LNG return, Gulf of Mexico hurricane

Adds latest prices

By Scott DiSavino

Nov 4 (Reuters) - U.S. natural gas futures jumped about 4% on Monday with another hurricane expected to enter the Gulf of Mexico this week, the return to service of Freeport LNG's export plant in Texas and forecasts for stronger demand than expected.

The U.S. National Hurricane Center forecast Tropical Depression 18 would strengthen into a hurricane as it moves northwest from the Caribbean Sea toward Cuba and the Gulf of Mexico, and then to weaken into a tropical storm before possibly hitting the U.S. Gulf Coast near Louisiana over the weekend.

Hurricanes can boost gas prices by cutting output, although only about 2% of the nation's gas comes from the federal offshore Gulf of Mexico. But hurricanes can also reduce prices by destroying demand for gas through power outages and knocking liquefied natural gas $(LNG)$ export plants out of service. Some storms do some of both.

Front-month gas futures NGc1 for December delivery on the New York Mercantile Exchange (NYMEX) rose 11.8 cents, or 4.4%, to settle at $2.781 per million British thermal units (mmBtu).

Open interest in NYMEX futures, meanwhile, rose to a record high for a third day in a row, reaching 1.767 million contracts on Nov. 1.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states held at 101.3 billion cubic feet per day (bcfd) so far in November, the same as in October. That compared with a record 105.3 bcfd in December 2023.

With so many firms still curtailing drilling activities, analysts projected average output in calendar 2024 will decline for the first time since 2020 when the COVID pandemic cut demand for the fuel.

Analysts, however, projected producers would boost output later this year and in 2025 to meet rising liquefied natural gas (LNG) export demand with two new export plants - Venture Global LNG's Plaquemines in Louisiana and Cheniere Energy's LNG.N Corpus Christi stage 3 expansion in Texas - expected to start producing LNG later this year.

Meteorologists projected the weather in the Lower 48 states would remain warmer than normal through at least Nov. 19. But even if mid-November is warmer than normal, it will be cooler than early November.

With seasonally cooler weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would rise from 101.0 bcfd this week to 102.6 bcfd next week. The forecasts for this week were higher than LSEG's outlook on Friday, while the forecast for next week was lower.

The amount of gas flowing to the seven big U.S. LNG export plants fell to an average of 12.0 bcfd so far in November from 13.1 bcfd in October. That compares with a monthly record high of 14.7 bcfd in December 2023.

The feedgas decline so far this month was mostly due to a shutdown at Freeport's 2.1-bcfd plant on Friday due to a power feed interruption at the pretreatement facility, according to a company report to Texas environmental regulators.

Gas flows to Freeport were on track to rise to a preliminary 1.8 bcfd on Monday, according to LSEG data, up from 0.3 bcfd on Nov. 1 and near zero on Nov. 2. That compares with an average of 1.9 bcfd during the prior week.

(Reporting by Scott DiSavino in New York and Sherin Elizabeth Varghese in Bengaluru; Editing by Paul Simao and David Gregorio)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net))

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For next-day SNL U.S. gas prices, see: 0#SNL-NG

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For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

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NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

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