UPDATE 1-US natgas prices up 3% to 7-week high on extreme cold forecasts

(Adds latest prices) By Scott DiSavino Jan 8 (Reuters) - U.S. natural gas futures gained about 3.0% to a seven-week high on Monday on lower output and forecasts for extremely cold weather next week to boost demand to a daily record high. In addition to sky-high gas demand, extreme cold could cause production to drop by freezing oil and gas wells, pipes and other energy equipment as happened in Texas in February 2021 and in Mid-Atlantic states in December 2022. The industry calls freezing wells freeze-offs. In volatile trade front-month gas futures for February delivery on the New York Mercantile Exchange rose 8.7 cents, or 3.0%, to settle at $2.980 per million British thermal units (mmBtu), their highest since Nov. 16. That put the contract up for a fifth day for the first time since October and kept it in technically overbought territory for a third day in a row for the first time since November. Earlier in the session, the contract was down about 7%. Even though the coldest part of winter is coming, many traders said winter futures for November-March likely already peaked at $3.608 per mmBtu on Nov. 1 due primarily to recent record production and ample supplies of gas in storage. Analysts said there was currently about 12.2% more gas in storage than normal for this time of year. In other news, U.S. energy companies Chesapeake Energy and Southwestern Energy are nearing a merger that would create the biggest U.S. gas producer, ahead of current leader EQT. In Massachusetts, U.S. energy company Constellation Energy's Everett liquefied natural gas (LNG) import terminal took delivery of a second load of LNG from Trinidad this winter, according to data from financial firm LSEG. SUPPLY AND DEMAND LSEG said average gas output in the Lower 48 U.S. states fell to 107.7 billion cubic feet per day (bcfd) so far in January, down from a monthly record of 108.5 bcfd in December. Meteorologists projected the weather across the country would remain mostly warmer than normal through Jan. 12 before turning colder than normal from Jan. 13-23. As use of the fuel for heating increases, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 137.2 bcfd this week to 158.4 bcfd next week. The forecasts for this week and next were higher than LSEG's outlook on Friday. On a daily basis, total U.S. gas demand, including exports, was on track to reach 169.2 bcfd on Martin Luther King Day on Jan. 15 even though many businesses and government offices will close for the long U.S. holiday weekend, according to LSEG's latest forecasts. That was higher than LSEG projected last week and would top the current daily record of 162.5 bcfd set during Winter Storm Elliott on Dec. 23, 2022, according to federal energy data from S&P Global Commodities Insights. Gas flows to the seven big U.S. LNG export plants rose to an average of 14.8 bcfd so far in January, up from a monthly record of 14.7 bcfd in December.) in Asia. The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine. Gas was trading around $10 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $11 at the Japan Korea Marker (JKM) in Asia. Week ended Week ended Year ago Five-year Jan 5 Dec 29 Jan 5 average Forecast Actual Jan 5 U.S. weekly natgas storage change (bcf): -123 -14 -23 -89 U.S. total natgas in storage (bcf): 3,353 3,476 2,900 2,988 U.S. total storage versus 5-year average 12.2% 13.0% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2023 (2018-2022) Henry Hub 2.79 2.89 3.42 2.66 3.60 Title Transfer Facility (TTF) 10.11 10.99 19.79 13.04 14.39 Japan Korea Marker (JKM) 11.57 11.56 24.34 14.39 14.31 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 507 473 360 442 446 U.S. GFS CDDs 1 1 4 3 3 U.S. GFS TDDs 508 474 364 445 449 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year (2019-2023) Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 108.0 107.8 107.6 101.2 93.8 U.S. Imports from Canada8 9.1 9.4 9.7 9.3 9.3 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3 Total U.S. Supply 117.1 117.1 117.3 110.5 103.4 U.S. Demand (bcfd) U.S. Exports to Canada 3.0 2.8 2.7 2.8 2.7 U.S. Exports to Mexico 5.3 4.9 5.0 4.8 5.3 U.S. LNG Exports 14.7 14.9 14.4 12.5 8.9 U.S. Commercial 15.7 16.7 22.1 14.9 16.6 U.S. Residential 26.0 28.4 38.5 24.1 28.6 U.S. Power Plant 36.3 35.4 38.5 29.9 29.5 U.S. Industrial 25.6 25.7 27.7 24.7 25.6 U.S. Plant Fuel 5.3 5.4 5.3 5.4 5.4 U.S. Pipe Distribution 3.0 3.0 3.6 3.0 2.9 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 112.0 114.6 136.2 102.1 108.7 Total U.S. Demand 134.9 137.2 158.4 122.2 125.6 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 79 78 83 107 81 Jan-Jul 81 80 77 102 79 Oct-Sep 82 81 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jan 12 Jan 5 Dec 29 Dec 22 Dec 15 Wind 7 8 11 11 11 Solar 2 2 2 2 3 Hydro 5 6 7 6 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 42 42 40 41 41 Coal 21 19 16 18 17 Nuclear 20 20 22 20 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.75 2.83 Transco Z6 New York 2.55 3.57 PG&E Citygate 6.67 5.93 Eastern Gas (old Dominion South) 2.39 2.31 Chicago Citygate 2.44 2.58 Algonquin Citygate 5.00 5.36 SoCal Citygate 5.55 5.64 Waha Hub 1.69 2.54 AECO 1.70 1.85 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 58.25 58.75 PJM West 35.75 42.50 Ercot North 25.50 23.00 Mid C 115.00 57.25 Palo Verde 46.75 55.75 SP-15 46.25 56.25 (Reporting by Scott DiSavino; Editing by Alexander Smith; Editing by David Gregorio)