US natgas prices hold steady as daily output drop offsets mild forecasts

Oct 24 (Reuters) - U.S. natural gas futures held steady on Tuesday as a bullish drop in daily output and forecasts for a few cold days next week offset bearish record production in recent days and a mostly mild outlook through early November. Front-month gas futures for November delivery on the New York Mercantile Exchange remained unchanged at $2.927 per million British thermal units (mmBtu) at 9:21 a.m. EDT (1321 GMT). A lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 49.1%, the lowest since April 2022. Historic daily volatility hit a record high of 177.7% in February 2022 and a record low of 7.3% in June 1991. Historic volatility has averaged 74.6% so far this year, versus a record high of 92.8% in 2022 and a five-year (2018-2022) average of 57.9%. Lower spot or next-day prices at the Henry Hub benchmark in Louisiana have weighed on the futures market for most of this year. The spot market has traded below front-month futures for 167 out of 202 trading days so far this year, according to data from financial firm LSEG. Next-day prices at the Henry Hub gained about 2% to around $2.65 per mmBtu for Tuesday. Analysts have noted that so long as spot prices remain far enough below front-month futures 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. In other spot market news, gas prices at the Waha hub in West Texas fell about 92% to around 12 cents per mmBtu for Tuesday, their lowest since early May when prices briefly turned negative. Traders noted that price drop was a sign that gas supplies likely got trapped in West Texas due to an expected or unexpected pipeline reduction. SUPPLY AND DEMAND LSEG said average gas output in the Lower 48 U.S. states had risen to an average of 103.9 billion cubic feet per day (bcfd) so far in October, up from 102.6 bcfd in September and a record high of 103.1 bcfd in July. On a daily basis, however, output was on track to drop about 3.5 bcfd to a preliminary two-week low of 102.8 bcfd on Tuesday due mostly to reductions in Texas, Louisiana, Pennsylvania and Ohio, down from a record 106.2 bcfd on Monday. If correct, that would be the biggest one-day decline since December 2023, but analysts noted preliminary data is often revised later in the day. Even though the weather in the Lower 48 will remain mostly mild through Nov. 8, meteorologists noted it was turning seasonally cooler with the coming of winter and projected it will be much colder than normal for a few days from Oct. 30-Nov 2. LSEG forecast U.S. gas demand, including exports, would jump from 97.2 bcfd this week to 106.4 bcfd next week. The forecast for next week was higher than LSEG's outlook on Monday. Pipeline exports to Mexico have slid to an average of 6.9 bcfd so far in October, down from a monthly record high of 7.2 bcfd in September. Analysts however expect exports to Mexico to rise in coming months once New Fortress Energy's plant in Altamira starts pulling in U.S. gas to turn into liquefied natural gas (LNG) for export in November. Gas flows to the seven big U.S. LNG export plants have risen to 13.6 bcfd so far in October, up from 12.6 bcfd in September. That compares with a record high of 14.0 bcfd in April. Week ended Week ended Year ago Five-year Oct 20 Oct 13 Oct 20 average Forecast Actual Oct 20 U.S. weekly natgas storage change (bcf): 73 84 61 66 U.S. total natgas in storage (bcf): 3,699 3,626 3,387 3,517 U.S. total storage versus 5-year average 5.2% 5.1% 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 2.93 2.93 6.08 6.54 2.89 Title Transfer Facility (TTF) 16.22 15.90 38.37 40.50 7.49 Japan Korea Marker (JKM) 18.59 18.40 32.98 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 176 167 124 184 198 U.S. GFS CDDs 29 32 25 29 24 U.S. GFS TDDs 205 199 149 203 222 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Week Next Week This Week Five-Year Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 104.5 105.1 105.5 99.4 93.1 U.S. Imports from Canada 6.9 6.8 6.5 8.2 7.8 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 111.5 111.9 112.0 107.6 101.0 U.S. Demand (bcfd) U.S. Exports to Canada 1.4 1.7 1.7 2.4 2.2 U.S. Exports to Mexico 6.7 6.9 7.0 5.5 5.6 U.S. LNG Exports 14.2 13.8 13.6 11.5 7.1 U.S. Commercial 6.8 6.7 9.7 7.8 7.0 U.S. Residential 7.8 7.4 13.5 9.9 7.5 U.S. Power Plant 30.5 31.3 29.8 28.3 30.1 U.S. Industrial 22.6 22.1 23.6 22.7 22.1 U.S. Plant Fuel 5.2 5.2 5.2 5.2 5.1 U.S. Pipe Distribution 2.0 2.0 2.2 2.0 2.0 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 75.0 74.9 84.2 76.0 73.9 Total U.S. Demand 97.4 97.2 106.4 95.4 88.8 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 93 83 107 81 Jan-Jul 88 89 77 102 79 Oct-Sep 88 88 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Oct 27 Oct 20 Oct 13 Oct 6 Sep 29 Wind 13 10 10 11 8 Solar 4 4 4 4 4 Hydro 5 5 5 5 5 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 40 42 41 42 44 Coal 16 17 16 16 17 Nuclear 20 20 21 19 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.65 2.60 Transco Z6 New York 1.57 1.50 PG&E Citygate 7.19 6.17 Eastern Gas (old Dominion South) 1.55 1.38 Chicago Citygate 1.97 1.86 Algonquin Citygate 1.71 1.73 SoCal Citygate 6.02 5.76 Waha Hub 0.12 1.47 AECO 1.68 1.53 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day New England 29.50 28.25 PJM West 35.75 28.25 Ercot North 30.00 23.25 Mid C 67.67 35.00 Palo Verde 47.50 49.75 SP-15 48.75 51.50 (Reporting by Scott DiSavino; Editing by Jan Harvey)