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U.S. natgas futures up 1% on lower output, hotter forecasts

       June 28 (Reuters) - U.S. natural gas futures edged up about 1% on Tuesday on a preliminary drop in daily
output and forecasts for hotter weather over the next two weeks that will prompt power generators to burn more
gas to keep air conditioners humming.
    That increase also came on the last day of trade for the July futures contract, which is often a volatile
day since trade volume is extremely low.
    On its last day as the front month, gas futures for July delivery on the New York Mercantile
Exchange (NYMEX) rose 7 cents, or 1.1%, to $6.571 per million British thermal units (mmBtu) at 7:57 a.m. EDT
(1157 GMT).
    Futures for August, which will soon be the front month, were up about 1% to $6.59 per mmBtu.
    With the U.S. Federal Reserve expected to keep raising interest rates, open interest in NYMEX futures
fell on Monday to its lowest since July 2016 as investors continued to cut back on risky assets.
    So far this year, U.S. gas futures were up about 76% as much higher prices in Europe and Asia keep demand
for U.S. liquefied natural gas (LNG) exports strong, especially since Russia's Feb. 24 invasion of Ukraine
stoked fears Moscow might cut gas supplies to Europe.
    Gas was trading around $40 per mmBtu in Europe and $37 in Asia.

    U.S. futures lag far behind global prices because the United States is the world's top producer, with all
the gas it needs for domestic use, while capacity constraints inhibit additional LNG exports.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 95.1 billion cubic
feet per day (bcfd) so far in June from 95.2 bcfd in May. That compares with a monthly record of 96.1 bcfd in
December 2021.
    On a daily basis, output was on track to drop 1.8 bcfd to a preliminary two-week low of 94.3 bcfd on
Tuesday. That would be its biggest daily output drop since early February, but preliminary data is often
revised higher later in the day.
    With hotter weather coming, Refinitiv projected average U.S. gas demand including exports would rise from
94.0 bcfd this week to 95.9 bcfd next week. The forecast for next week was lower than Refinitiv's outlook on
Monday due to lower than previously expected LNG exports.
    The amount of gas flowing to U.S. LNG export plants dropped from an average of 12.5 bcfd in May to 11.2
bcfd so far in June due to the June 8 outage at Freeport LNG's plant in Texas, which is expected to last about
three months. That compares with a monthly record of 12.9 bcfd in March.
    The seven big U.S. export plants can turn about 13.6 bcfd of gas into LNG.
    Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 bcfd of gas before it shut, so a
90-day outage would leave around 180 billion cubic feet (bcf) of gas available to the U.S. market.

    Analysts said that should allow U.S. utilities to quickly rebuild low gas stockpiles ahead of next winter,
but cuts the amount of U.S. gas available to the rest of the world.
    That is a problem for Europe where most U.S. LNG has gone as countries there wean themselves off Russian
energy since Moscow's invasion of Ukraine.
    Over the past two weeks, Russia has exported just 3.7 bcfd of gas on the three main lines into Germany -
Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech
Republic-Germany route. That is down from around 6.5 bcfd in mid June and an average of 11.6 bcfd in June

                                              Week ended     Week ended     Year ago   Five-year
                                                Jun 24         Jun 17        Jun 24     average
                                              (Forecast)      (Actual)                   Jun 24
 U.S. weekly natgas storage change (bcf):         +70            +74          +73         +73
 U.S. total natgas in storage (bcf):             2,239          2,169        2,547       2,573
 U.S. total storage versus 5-year average       -13.0%         -13.2%

 Global Gas Benchmark Futures ($ per mmBtu)   Current Day     Prior Day    This Month  Prior Year   Five Year
                                                                           Last Year    Average      Average
                                                                                          2021     (2017-2021)
 Henry Hub                                       6.55           6.50          3.27        3.73        2.89
 Title Transfer Facility (TTF)                   39.42          40.27        10.27       16.04        7.49
 Japan Korea Marker (JKM)                        37.09          37.10        11.58       18.00        8.95

 Refinitiv 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                                     4              4            2           5            5
 U.S. GFS CDDs                                    227            220          202         197          190
 U.S. GFS TDDs                                    231            224          204         202          195

 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts
                                              Prior Week    Current Week   Next Week   This Week    Five-Year
                                                                                       Last Year   Average For
 U.S. Supply (bcfd)
 U.S. Lower 48 Dry Production                    95.2           95.7          96.3        91.0        84.6
 U.S. Imports from Canada                         7.7            7.7          7.7         8.0          7.7
 U.S. LNG Imports                                 0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                               102.9          103.4        103.9        99.0        92.4

 U.S. Demand (bcfd)
 U.S. Exports to Canada                           2.3            2.2          2.2         2.3          2.2
 U.S. Exports to Mexico                           6.0            6.0          6.1         6.5          5.1
 U.S. LNG Exports                                10.6           10.5          10.5        11.1         4.3
 U.S. Commercial                                  4.4            4.4          4.3         4.3          4.7
 U.S. Residential                                 3.7            3.5          3.5         3.5          4.3
 U.S. Power Plant                                37.9           39.6          41.4        39.5        32.8
 U.S. Industrial                                 21.0           21.0          20.9        20.8        20.9
 U.S. Plant Fuel                                  4.7            4.7          4.8         4.7          4.7
 U.S. Pipe Distribution                           2.0            2.0          2.1         2.0          1.8
 U.S. Vehicle Fuel                                0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                          73.8           75.3          77.1        74.9        69.3
 Total U.S. Demand                               92.7           94.0          95.9        94.8        80.9

 U.S. weekly power generation percent by fuel - EIA
                                              Week ended     Week ended    Week ended  Week ended  Week ended
                                                 Jul 1         Jun 24        Jun 17      Jun 10       Jun 3
 Wind                                                                          12          8           12
 Solar                                                                         3           5            4
 Hydro                                                                         7           7            7
 Other                                                                         2           2            2
 Petroleum                                                                     0           0            0
 Natural Gas                                                                   38          41          36
 Coal                                                                          20          20          19
 Nuclear                                                                       17          19          19

 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
 Hub                                          Current Day     Prior Day
 Henry Hub 6.09           5.80
 Transco Z6 New York 5.67           5.74
 PG&E Citygate 7.81           7.49
 Dominion South 5.51           5.38
 Chicago Citygate 6.02           5.88
 Algonquin Citygate 5.95           5.95
 SoCal Citygate 7.93           6.57
 Waha Hub 5.70           5.50
 AECO 4.51           4.63

 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
 Hub                                          Current Day
 New England 64.00          67.75
 PJM West 75.00          99.25
 Ercot North 82.00          86.00
 Mid C 75.50          66.00
 Palo Verde 80.25          73.50
 SP-15 77.50          71.00

 (Reporting by Scott DiSavino, Editing by Louise Heavens)

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