US natgas prices edge up on extreme cold, rising heating and LNG feedgas demand

Adds latest prices

By Scott DiSavino

Jan 9 (Reuters) - U.S. natural gas futures edged up about 1% to a one-week high on Thursday on forecasts for the weather to remain much colder than normal through late January, expectations for more demand this week than previously expected and as near-record amounts of gas flow to liquefied natural gas $(LNG)$ export plants.

Earlier in the day, prices retreated a bit on forecasts for less cold weather over the next two weeks and as output disruptions from frozen wells stabilized.

Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange rose 5.0 cents, or 1.4%, to settle at $3.701 per million British thermal units, the highest close since Dec. 30.

As the market takes a break following an extremely volatile couple of weeks, analysts said price spikes were still possible in coming days because even colder weather was expected next week. That cold weather could boost gas supply curtailments from freezing wells and pipes, known in the industry as freeze-offs.

Nine of the last 10 trading days saw moves up or down of more than 5%. That compares with an average daily price move of around 3.7% in calendar 2024.

Analysts projected the next three storage reports for the weeks ending Jan. 10, 17 and 24 could show utilities pulling over 200 billion cubic feet (bcf) of gas each week from inventories to meet soaring heating demand. Some analysts said withdrawals this month could top the current record high of 994 bcf set in January 2022, according to federal energy data.

Those storage withdrawals could wipe out the current surplus of gas in storage, which stands near 7% over the five-year average, by the end of January. That would be the first time stockpiles would fall below the five-year average since January 2022. EIA/GAS NGAS/POLL

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states slid to 102.8 billion cubic feet per day (bcfd) so far in January, down from 103.8 bcfd in December. That compares with a record 105.3 bcfd in December 2023.

Since daily output hit a 10-month high of 106.0 bcfd on Dec. 30, supplies were on track to drop by around 6.2 bcfd to a preliminary eight-week low of 99.9 bcfd on Thursday due mostly to freezing wells. The projected amount of freeze-offs was the same as on Wednesday.

Output declines so far this year have been much smaller than previous winters. Freeze-offs cut gas output by around 16.5 bcfd from Jan. 8-16 in 2024, 19.4 bcfd from Dec. 21-24 in 2022, and 20.4 bcfd from Feb. 8-17 in 2021, according to LSEG data.

Meteorologists projected weather in the Lower 48 states would remain mostly colder than normal through Jan. 24, with the coldest days now expected early next week.

LSEG forecast average gas demand in the Lower 48, including exports, would hold around 147.8 bcfd this week and next. The forecast for this week was higher than LSEG's outlook on Wednesday.

On a daily basis, LSEG projected total gas use so far this winter peaked at 158.2 bcfd on Jan. 8. That fell short of the daily record high of 168.4 bcfd on Jan. 16, 2024.

The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.0 bcfd so far in January, up from 14.4 bcfd in December. That compares with a monthly record high of 14.7 bcfd in December 2023.

(Reporting by Scott DiSavino; editing by Barbara Lewis and Leslie Adler)

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

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

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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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