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U.S. natgas falls 4% on less cold forecasts, Freeport LNG delay

          Nov 16 (Reuters) - U.S. natural gas futures fell about 4% to a two-week low on Wednesday on forecasts
for less cold weather and lower heating demand next week than previously expected, and on expectations
Freeport LNG will delay the restart of its liquefied natural gas (LNG) export plant in Texas.
    A few LNG vessels have turned away from Freeport over the past few days on expectations the plant's
restart will be delayed until December or later, according to ship tracking data from Refinitiv.
    Federal pipeline safety regulators released a heavily redacted consultant's report that blamed inadequate
operating and testing procedures, human error and fatigue for the June 8 explosion that shut the Freeport
    Freeport had not yet submitted a request to resume service to the U.S. Department of Transportation's
Pipeline and Hazardous Materials Safety Administration (PHMSA) as of earlier this week. Many analysts believe
that means the plant will not return to service until December at the earliest.
    Until late last week, Freeport had said repeatedly that the plant was still on track to return to service
in November. The company, however, did not mention a November restart, or any restart date, in comments made
over the past few days.
    Once the 2.1 billion-cubic-feet-per-day (bcfd) Freeport facility restarts, U.S. gas prices will likely
rise due to increased demand from the country's LNG export plants.
    On the flip side, the delay in Freeport's return means less gas is available for Europe to
import, which has contributed to prices there spiking around 21% so far this week. Europe needs U.S. gas
because Russia slashed the amount of gas it usually exports after several European countries imposed sanctions
to punish Moscow for its invasion of Ukraine.
    A couple of vessels seem to have given up on a quick restart for Freeport. Prism Brilliance, which waited
outside the plant for about three weeks from mid-October, was now waiting outside of Corpus Christi where
Cheniere Energy Inc (LNG) has an LNG export plant. LNG Rosenrot, which was expected to arrive at Freeport in
late November, has since turned around in the Atlantic Ocean and was now heading toward Gibraltar, according
to Refinitiv data.
    Prism Agility still says it is on track for Freeport, but Refinitiv's ship tracking map shows the vessel
as turning east in the Atlantic Ocean.
    There are still, however, a couple of vessels waiting outside Freeport: Prism Diversity and Prism Courage.
    Front-month gas futures fell 24.9 cents, or 4.1%, to $5.785 per million British thermal units
(mmBtu) at 9:23 a.m. EST (1423 GMT), putting it on track for its lowest close since Nov. 1.
    Despite the decline, gas futures were still up about 58% so far this year as much higher global gas prices
feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine.
    Gas was trading at $36 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $27
at the Japan Korea Marker (JKM) in Asia.
    U.S. gas futures lag global prices because the United States is the world's top producer with all the fuel
it needs for domestic use, while capacity constraints and the Freeport outage have prevented the country from
exporting more LNG.
    Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 99.2 bcfd so far in
November, down from a record 99.4 bcfd in October.
    With much colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would
jump from 122.6 bcfd this week to 126.6 bcfd next week. The forecast for this week was higher than Refinitiv's
outlook on Tuesday, while its forecast for next week was lower.
    The average amount of gas flowing to U.S. LNG export plants rose to 11.8 bcfd so far in November, up from
11.3 bcfd in October.
    That is still well below the monthly record of 12.9 bcfd in March due mostly to the ongoing outage at
Freeport. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.
    During the first 10 months of 2022, roughly 66%, or 7.0 bcfd, of U.S. LNG exports went to Europe, as
shippers diverted cargoes from Asia to get higher prices. Last year, just 29%, or about 2.8 bcfd, of U.S. LNG
exports went to Europe.
    Russia, the world's second-biggest gas producer, has provided about a third of Europe's gas in recent
years, totaling about 18.3 bcfd in 2021. The European Union wants to cut Russian gas imports by two-thirds by
the end of 2022 and refill stockpiles to 80% of capacity by Nov. 1 and 90% by Nov. 1 each year beginning in
    Russian gas exports via 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 - averaged just
1.1 bcfd so far in November, down from 1.2 bcfd in October and well below the 9.8 bcfd seen in November 2021.
    Gas stockpiles in northwestern Europe - Belgium, France, Germany and the Netherlands -
were about 11% above their five-year (2017-2021) average for this time of year, according to Refinitiv.
Storage was currently around 96% of capacity.
    That is much healthier than U.S. gas inventories, which were still about 2% below their five-year norm.
Analysts, however, said last week's build, which will be reported in this week's storage report, could show
U.S. stockpiles rose above normal levels for the first time since January.
                                              Week ended     Week ended     Year ago   Five-year
                                                Nov 11          Nov 4        Nov 11     average
                                              (Forecast)      (Actual)                   Nov 11
 U.S. weekly natgas storage change (bcf):         +64            +79          +23          -5
 U.S. total natgas in storage (bcf):             3,644          3,580        3,640       3,656
 U.S. total storage versus 5-year average        -0.3%          -2.1%

 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                                       5.93           6.03          5.12        3.73        2.89
 Title Transfer Facility (TTF)                   36.52          37.45        27.71       16.04        7.49
 Japan Korea Marker (JKM)                        27.79          27.23        32.98       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                                    353            364          304         296          309
 U.S. GFS CDDs                                     5              5            8           11           9
 U.S. GFS TDDs                                    358            369          312         307          318

 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                    98.8           100.1        100.4        95.3        89.6
 U.S. Imports from Canada                         6.2            8.5          8.0         8.8          8.2
 U.S. LNG Imports                                 0.0            0.0          0.0         0.0          0.1
 Total U.S. Supply                               105.0          108.5        108.4       104.1        97.9

 U.S. Demand (bcfd)
 U.S. Exports to Canada                           2.3            2.2          2.2         3.3          2.9
 U.S. Exports to Mexico                           5.8            5.6          5.7         5.5          5.1
 U.S. LNG Exports                                11.5           12.3          12.7        11.3         6.4
 U.S. Commercial                                  8.5           14.2          15.9        12.0        11.5
 U.S. Residential                                11.6           23.0          26.0        18.2        17.2
 U.S. Power Plant                                29.1           32.3          30.9        27.4        26.0
 U.S. Industrial                                 22.6           25.2          25.5        23.4        24.0
 U.S. Plant Fuel                                  4.9            4.9          5.0         4.9          4.9
 U.S. Pipe Distribution                           2.1            2.7          2.8         2.7          2.1
 U.S. Vehicle Fuel                                0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                          78.9           102.5        106.1        88.7        85.8
 Total U.S. Demand                               98.4           122.6        126.6       108.8        100.2

 U.S. weekly power generation percent by fuel - EIA
                                              Week ended     Week ended    Week ended  Week ended  Week ended
                                                Nov 18         Nov 11        Nov 4       Oct 28      Oct 21
 Wind                                             10             15            12          15          11
 Solar                                             3              3            3           3            3
 Hydro                                             7              6            5           5            5
 Other                                             2              3            2           2            3
 Petroleum                                         0              0            0           0            0
 Natural Gas                                      40             38            39          37          39
 Coal                                             17             16            18          18          19
 Nuclear                                          21             20            20          19          19

 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
 Hub                                          Current Day     Prior Day
 Henry Hub 5.90           6.24
 Transco Z6 New York 6.50           6.39
 PG&E Citygate 9.05           8.76
 Dominion South 5.34           5.43
 Chicago Citygate 5.94           6.21
 Algonquin Citygate 6.46           6.64
 SoCal Citygate 8.95           8.87
 Waha Hub 5.35           5.00
 AECO 4.97           4.60

 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
 Hub                                          Current Day     Prior Day
 New England 64.00          81.25
 PJM West 78.25         103.00
 Ercot North 75.00          71.50
 Mid C 99.50         107.11
 Palo Verde 84.75          85.50
 SP-15 85.00          84.50
 (Reporting by Scott DiSavino; editing by Jonathan Oatis)

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