UPDATE 2-US natgas prices jump 4% to four-week high on colder January forecasts

(Adds latest prices) By Scott DiSavino Jan 3 (Reuters) - U.S. natural gas futures gained about 4% to a four-week high on Wednesday on a decline in daily output and forecasts for colder weather in mid-January than previously expected. That price increase came despite milder forecasts for weather and lower heating demand this week and next, and a small decline in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants. Traders noted that mild weather should enable utilities to keep pulling less gas from storage in coming weeks because heating demand is currently lower than usual. Analysts forecast there was about 12.1% more gas in storage than normal at this time of year. Front-month gas futures for February delivery on the New York Mercantile Exchange rose 10.0 cents, or 3.95, to settle at $2.668 per million British thermal units (mmBtu), their highest close since Dec. 5. Even though late January is usually the coldest part of the year, 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. SUPPLY AND DEMAND Financial firm LSEG said average gas output in the lower 48 U.S. states fell to 107.5 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 would remain mostly near to warmer than normal through Jan. 12 before turning colder than normal from Jan. 13-18. With colder weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 132.7 bcfd this week to 133.7 bcfd next week. Those forecasts were lower than LSEG's outlook on Tuesday. U.S. pipeline exports to Mexico fell to an average of 4.2 bcfd so far in January, down from 4.6 bcfd in December and a monthly record 7.0 bcfd in August. Analysts expect exports to Mexico to rise in coming months once U.S.-based New Fortress Energy's plant in Altamira in Mexico starts pulling in U.S. gas to turn into LNG for export. Gas flows to the seven big U.S. LNG export plants slid to an average of 14.6 bcfd so far in January, down from a monthly record of 14.7 bcfd in December. 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 $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $12 at the Japan Korea Marker (JKM) in Asia. Week ended Week ended Year ago Five-year Dec 29 Dec 22 Dec 29 average Forecast Actual Dec 29 U.S. weekly natgas storage change (bcf): -40 -87 -219 -97 U.S. total natgas in storage (bcf): 3,450 3,490 2,923 3,077 U.S. total storage versus 5-year average 10.0% 12.1% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2023 (2018-2022) Henry Hub 2.60 2.57 3.42 2.66 3.60 Title Transfer Facility (TTF) 10.33 9.70 19.79 13.04 14.39 Japan Korea Marker (JKM) 11.50 11.52 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 458 430 328 439 444 U.S. GFS CDDs 1 1 5 4 3 U.S. GFS TDDs 459 431 333 443 447 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 108.8 108.0 108.2 100.7 93.8 U.S. Imports from Canada8 8.5 9.0 8.8 8.7 9.3 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.3 Total U.S. Supply 117.3 117.0 117.0 109.4 103.4 U.S. Demand (bcfd) U.S. Exports to Canada 3.4 3.0 2.9 3.1 2.7 U.S. Exports to Mexico 5.4 4.7 4.7 5.4 5.3 U.S. LNG Exports 14.7 14.6 14.0 11.9 8.9 U.S. Commercial 12.8 15.6 16.6 13.4 16.6 U.S. Residential 20.3 25.9 28.3 21.4 28.6 U.S. Power Plant 31.0 35.0 33.3 28.2 29.5 U.S. Industrial 24.3 25.6 25.6 24.0 25.6 U.S. Plant Fuel 5.4 5.3 5.3 5.4 5.4 U.S. Pipe Distribution 2.6 2.9 3.0 2.9 2.9 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 96.4 110.4 112.2 95.4 108.7 Total U.S. Demand 120.0 132.7 133.7 115.8 125.6 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 78 77 83 107 81 Jan-Jul 78 77 77 102 79 Oct-Sep 79 79 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jan 5 Dec 29 Dec 22 Dec 15 Dec 8 Wind 9 11 11 11 12 Solar 3 2 2 3 3 Hydro 6 7 6 6 5 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 40 40 41 41 40 Coal 18 16 18 17 17 Nuclear 21 22 20 20 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.55 2.58 Transco Z6 New York 2.35 2.15 PG&E Citygate 3.81 3.55 Eastern Gas (old Dominion South) 1.92 1.82 Chicago Citygate 2.40 2.13 Algonquin Citygate 2.72 3.10 SoCal Citygate 3.61 2.97 Waha Hub 1.99 1.60 AECO 1.31 1.60 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 41.50 31.75 PJM West 36.25 24.25 Ercot North 25.75 19.50 Mid C 72.00 70.00 Palo Verde 44.25 33.00 SP-15 45.00 43.00 (Reporting by Scott DiSavino; Editing by Jan Harvey, Jonathan Oatis and David Gregorio)