U.S. natgas holds at 21-month low as output drop offsets falling demand

          Jan 31 (Reuters) - U.S. natural gas futures held near a 21-month low on Tuesday, keeping the contract on track
for its second-biggest monthly drop in history, as a decline in output from this week's extreme cold offset forecasts
for warmer weather and less heating demand next week than previously expected.
    Gas prices have been depressed for weeks due to a growing belief that the country has more than enough gas in
storage for the rest of the winter and expectations that Freeport LNG's liquefied natural gas (LNG) export plant in
Texas is still weeks away from pulling in big amounts of gas to produce LNG.
    Output was on track to drop about 3.4 billion cubic feet per day (bcfd) over the past week or so to a preliminary
one-month low of 95.8 bcfd as cold weather and winter storms froze oil and gas wells - known as freeze-offs in the
energy industry - in several states, including Texas, Oklahoma, Colorado, North Dakota and Pennsylvania.
    Despite this week's extreme cold, temperatures in the U.S. Lower 48 states have averaged about 42.2 degrees
Fahrenheit (5.7 Celsius) so far in January, putting this month on track to be the warmest January since 2006 when the
mercury averaged a record 42.8 F, according to data from Refinitiv and the federal government.
    Front-month gas futures for March delivery remained unchanged at $2.674 per million British thermal units
at 10:04 a.m. EST (1504 GMT). On Monday, the contract closed at its lowest level since April 2021.
    That kept the contract in oversold territory with a relative strength index (RSI) below 30 for a second day in a
row and the 15th time this year.
    For the month, the contract was down about 40%, putting it on track for its second-biggest monthly loss on record
after dropping by 42% in January 2001.
    Meteorologists forecast temperatures across much of the lower 48 U.S. states would remain mostly colder than
normal through Feb. 4 before turning warmer than normal from Feb. 5 through at least Feb. 15.
    With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 134.5 bcfd this
week to 128.8 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Monday, while its
forecast for next week was lower.
    That should allow utilities to continue pulling less gas from storage for a fourth or fifth week in a row.

    The biggest wild card in the gas market remains when Freeport's export plant will exit a seven-month outage caused
by a fire in June 2022.
    Freeport is the second-biggest U.S. LNG export plant, and traders expect prices to rise once it starts pulling in
big amounts of gas, boosting demand for the fuel. The plant can pull in about 2.1 bcfd of gas daily, about 2% of what
U.S. gas producers take from the ground.
    Freeport has been pulling in small amounts of gas (about 29 million cubic feet per day) since Jan. 26 when federal
regulators approved the company's plan to start cooling down parts of the plant. But the plant will not start taking
in large amounts of gas until it starts producing LNG.
    Several analysts have said they do not expect it to start producing LNG until February, March or later.
    Some vessels have turned away from Freeport in recent weeks, possibly including Corcovado LNG over the past 24
hours, which seems to be heading for another port.
    But several tankers were still waiting in the Gulf of Mexico to pick up LNG from the plant, including Prism
Courage (since around Nov. 4), Prism Agility (Jan. 2), Prism Brilliance (Jan. 26) and Kmarin Diamond (Jan. 26).
                                                     Week ended     Week ended     Year ago    Five-year
                                                       Jan 27         Jan 20        Jan 27      average
                                                     (Forecast)      (Actual)                    Jan 27
 U.S. weekly natgas storage change (bcf):               -138            -91          -261         -181
 U.S. total natgas in storage (bcf):                    2,591          2,729         2,361       2,420
 U.S. total storage versus 5-year average               +7.1           +4.9%


 Global Gas Benchmark Futures ($ per mmBtu)          Current Day     Prior Day    This Month   Prior Year   Five Year
                                                                                  Last Year     Average      Average
                                                                                                  2022     (2018-2022)
 Henry Hub                                              2.63           2.68          4.26         6.54        3.60
 Title Transfer Facility (TTF)                          18.42          17.48         28.25       40.50        14.39
 Japan Korea Marker (JKM)                               19.49          19.50         28.53       34.11        14.31


 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                                           400            417           452         420          420
 U.S. GFS CDDs                                            5              5             3           5            4
 U.S. GFS TDDs                                           405            422           455         425          424

 Refinitiv 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                           98.5           97.1          97.6         91.7        88.8
 U.S. Imports from Canada                                8.3            8.6           8.5         10.2         9.4
 U.S. LNG Imports                                        0.0            0.0           0.0         0.2          0.4
 Total U.S. Supply                                      106.8          105.7         106.1       102.1        98.6

 U.S. Demand (bcfd)
 U.S. Exports to Canada                                  2.6            2.2           2.3         2.2          2.8
 U.S. Exports to Mexico                                  5.3            5.2           5.3         6.0          5.3
 U.S. LNG Exports                                       12.5           12.5          12.2         12.3         7.2
 U.S. Commercial                                        16.5           18.0          16.7         19.4        17.1
 U.S. Residential                                       27.9           30.7          27.8         33.3        29.8
 U.S. Power Plant                                       32.3           31.7          31.3         29.6        28.5
 U.S. Industrial                                        25.7           26.2          25.4         26.0        25.6
 U.S. Plant Fuel                                         4.9            4.8           4.8         4.9          4.9
 U.S. Pipe Distribution                                  2.9            3.0           2.9         2.9          2.4
 U.S. Vehicle Fuel                                       0.1            0.1           0.1         0.1          0.1
 Total U.S. Consumption                                 110.4          114.6         109.0       116.2        108.4
 Total U.S. Demand                                      130.8          134.5         128.8       136.7        123.7


 U.S. weekly power generation percent by fuel - EIA
                                                     Week ended     Week ended    Week ended   Week ended  Week ended
                                                        Feb 3         Jan 27        Jan 20       Jan 13       Jan 6
 Wind                                                    14             11            13           11          12
 Solar                                                    2              2             2           2            2
 Hydro                                                    7              7             7           7            7
 Other                                                    2              2             2           2            2
 Petroleum                                                0              0             0           0            0
 Natural Gas                                             34             38            36           38          36
 Coal                                                    19             19            18           19          18
 Nuclear                                                 22             21            21           21          23

 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
 Hub                                                 Current Day     Prior Day
 Henry Hub 2.82           2.83
 Transco Z6 New York 3.20           2.64
 PG&E Citygate 8.40          13.00
 Eastern Gas (old Dominion South) 2.48           2.33
 Chicago Citygate 3.42           4.13
 Algonquin Citygate 12.00           3.23
 SoCal Citygate 10.13          10.81
 Waha Hub 3.20           2.28
 AECO 2.38           2.71

 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
 Hub                                                 Current Day     Prior Day
 New England 87.50          33.00
 PJM West 46.50          27.00
 Ercot North 106.50          15.25
 Mid C 100.00         172.00
 Palo Verde 90.75          70.50
 SP-5 91.50          71.75
 (Reporting by Scott DiSavino; Editing by Paul Simao)