US natgas prices fall 6% on record output, mild weather

Nov 6 (Reuters) - U.S. natural gas futures fell about 6% to a one-week low on Monday on record output and forecasts for mild weather through late November that should keep heating demand low and allow utilities to keep injecting gas into storage for at least a couple more weeks. Front-month gas futures for December delivery on the New York Mercantile Exchange fell 19.8 cents, or 5.6%, to $3.317 per million British thermal units (mmBtu) at 9:03 a.m. EDT (1303 GMT), putting the contract on track for its lowest close since Oct. 30. That would be the biggest one-day percentage decline since the contract lost about 7% on Sept. 5. With the front-month up about 11% last week, speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for the first time in three weeks to their highest since May 2022, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. One bearish factor that has weighed on the futures market for most 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 176 out of 212 trading days so far this year, according to data from financial firm LSEG. Next-day prices at the Henry Hub fell about 4% to $3.00 per mmBtu for Monday. Analysts have said that so long as the futures market stays in contango - with second month higher than 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. That contango rose to a record high for a third day in a row with the premium of January futures over December up to 29 cents per mmBtu. That premium could encourage some speculators to leave gas in storage for longer in hopes of higher prices later in the winter. Utilities, however, will start to pull gas from storage in mid to late November as daily heating demand for the fuel starts to exceed production. SUPPLY AND DEMAND LSEG said average gas output in the Lower 48 U.S. states rose to 107.3 billion cubic feet per day (bcfd) so far in November from a record 104.2 bcfd in October. On a daily basis, output hit an all-time high of 108.0 bcfd on Saturday, topping the prior daily record of 107.7 bcfd just two days earlier on Nov. 2. Meteorologists projected the weather would go from warmer than normal from Nov. 6-11 to near normal from Nov. 11-14 and then back to warmer than normal from Nov. 15-21. With seasonally colder weather coming, LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would jump from 101.5 bcfd this week to 109.2 bcfd next week. The forecasts for next week was higher than LSEG's outlook on Friday. Pipeline exports to Mexico slid to an average of 5.9 bcfd so far in November, down from 6.5 bcfd in October and a record 7.0 bcfd in August. Analysts expect U.S. exports to Mexico to rise in coming months once U.S. energy company New Fortress Energy's plant in Altamira starts pulling in U.S. gas to turn into LNG for export in November. Gas flows to the seven big U.S. liquefied natural gas (LNG) export plants rose to an average of 14.3 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 3.37 3.52 6.43 6.54 2.89 Title Transfer Facility (TTF) 14.47 15.01 35.88 40.50 7.49 Japan Korea Marker (JKM) 17.57 17.65 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 211 202 302 259 263 U.S. GFS CDDs 16 19 17 15 13 U.S. GFS TDDs 227 221 319 274 27 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 105.6 107.5 107.4 99.4 94.4 U.S. Imports from Canada 7.2 7.5 7.5 7.3 8.3 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 113.2 115.0 114.9 106.7 102.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.0 2.2 2.3 2.3 2.9 U.S. Exports to Mexico 6.1 6.1 6.3 5.0 5.3 U.S. LNG Exports 14.2 14.0 13.8 11.6 7.9 U.S. Commercial 10.3 8.9 11.2 8.6 11.7 U.S. Residential 14.8 12.2 16.9 11.8 17.5 U.S. Power Plant 31.0 28.1 27.5 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 79.3 86.7 70.8 88.6 Total U.S. Demand 109.8 101.5 109.2 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 91 83 107 81 Jan-Jul 89 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 3.00 3.12 Transco Z6 New York 1.34 1.70 PG&E Citygate 5.08 5.62 Eastern Gas (old Dominion South) 1.40 1.56 Chicago Citygate 2.11 2.54 Algonquin Citygate 1.53 1.83 SoCal Citygate 6.05 7.40 Waha Hub 0.69 1.97 AECO 1.87 1.91 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 24.75 32.50 PJM West 34.75 40.75 Ercot North 32.00 23.75 Mid C 60.00 65.00 Palo Verde 49.50 56.50 SP-15 47.75 57.00 (Reporting by Scott DiSavino Editing by Bernadette Baum)