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U.S. natgas futures ease from 7-year high ahead of storage report

    Sept 9 (Reuters) - U.S. natural gas futures eased on Thursday on forecasts for less hot weather and lower
demand over the next two weeks than previously expected as the market takes a break after soaring to a
seven-year high in the prior session.
    Since Hurricane Ida started targeting the U.S. Gulf Coast in late August, gas futures have gained over 20%
due mostly to the slow return of production in the Gulf of Mexico and continued hot weather across much of the
country. That heat has been especially extreme in the U.s. West where another heat wave is baking California.

    Traders also noted the lack of big price moves so far on Thursday came as the market waits for direction
from a federal report expected to show last week's hot weather and low storm-related output resulted in a much
smaller than usual inventory build. U.S. stockpiles, which utilities use to meet peak demand for heat during
the winter months, were already more than 7% below normal for this time of year.
    Analysts forecast U.S. utilities added 40 billion cubic feet (bcf) of gas into storage during the week
ended Sept. 3. That compares with an increase of 65 bcf in the same week last year and a five-year (2016-2020)
average increase of 65 bcf.
    If correct, last week's injection would boost stockpiles to 2.911 trillion cubic feet (tcf), which would
be 7.8% below the five-year average of 3.158 tcf for this time of year.
    Front-month gas futures were down 2.3 cents, or 0.5%, to $4.891 per million British thermal units
(mmBtu) at 9:53 a.m. EDT (1353 GMT). On Wednesday, the contract soared almost 8% to close at its highest since
February 2014.
    In the power market, prices for Thursday topped $300 per megawatt hour (MWh) at the Mid Columbia (Mid C)
hub in Washington State and at Palo Verde in Arizona, and over $200 at South Path 15 (SP-15) in Southern
California as consumers crank up their air conditioners to escape another heat wave. Those are the highest
prices for Mid C since July, Palo Verde since June and SP-15 since February.
    The California Independent System Operator (ISO), which operates the power grid for most of California,
declared a flex alert for Wednesday and Thursday evenings, urging consumers to conserve energy when solar
power stops working as the sun goes down and the drought-parched grid becomes more reliant on gas-fired
generators and imports from other states that are also suffering from the heat wave.
    In the next-day gas market, meanwhile, prices at several hubs rose to their highest since the February
freeze struck Texas, including the PG&E NG-CG-PGE-SNL and Southern California NG-SCL-CGT-SNL citygates in
California, Dominion South NG-PCN-APP-SNL in southwestern Pennsylvania and New York NG-CG-NY-SNL.
    Data provider Refinitiv said gas output in the U.S. Lower 48 states fell from an average of 92.0 billion
cubic feet per day (bcfd) in August to 89.6 bcfd so far in September with most of the losses in the Gulf Coast
area. That compares with an all-time monthly high of 95.4 bcfd in November 2019.
    Refinitiv projected average U.S. gas demand, including exports, would hold near 86.9 bdfd this week and
next. The forecast for next week was lower than Refinitiv projected on Wednesday as a cooler outlook will
cause power generators to burn less gas to keep air conditioners humming.
    The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants rose from an average of 10.5
bcfd in August to 10.7 bcfd so far in September as buyers around the world buy all the super-chilled gas the
United States can produce. That compares with a record 11.5 bcfd in April.
    Gas in Europe and Asia was trading around $19 per mmBtu, compared with near $5 for
the U.S. fuel. That put gas prices at the Title Transfer Facility (TTF) in the Netherlands, the European
benchmark, at a record high.
       
                                              Week ended     Week ended     Year ago   Five-year        
                                                 Sep 3         Aug 27        Sep 3      average    
                                              (Forecast)      (Actual)                   Sep 3     
 U.S. weekly natgas storage change (bcf):         40             20            65          65           
 U.S. total natgas in storage (bcf):             2,911          2,871         3,515      3,158          
 U.S. total storage versus 5-year average        -7.8%          -7.2% Global Gas Benchmark Futures ($ per mmBtu)   Current Day     Prior Day    This Month  Prior Year   Five Year
                                                                           Last Year    Average      Average
                                                                                          2020     (2016-2020)
 Henry Hub                                       4.96           5.01          2.28        2.13        2.66
 Title Transfer Facility (TTF)                   19.24          19.21         3.94        3.24        5.19
 Japan Korea Marker (JKM)                        18.65          18.69         4.63        4.22        6.49 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                                    17             13            37          29          32
 U.S. GFS CDDs                                    142            150          103         135          119
 U.S. GFS TDDs                                    159            163          140         164          151 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                    89.5           89.8          90.2        90.2        82.6
 U.S. Imports from Canada                         7.0            7.0          7.1         6.5          7.6
 U.S. LNG Imports                                 0.0            0.0          0.0         0.1          0.1
 Total U.S. Supply                               96.5           96.8          97.3        96.8        90.3 U.S. Demand (bcfd)                                                                                     
 U.S. Exports to Canada                           2.4            2.6          2.6         2.1          2.3
 U.S. Exports to Mexico                           6.3            5.8          6.1         6.0          5.0
 U.S. LNG Exports                                10.5           10.9          10.5        5.5          3.1
 U.S. Commercial                                  4.5            4.6          4.7         4.8          4.8
 U.S. Residential                                 3.6            3.6          3.8         4.0          3.8
 U.S. Power Plant                                37.1           32.1          31.6        33.8        32.8
 U.S. Industrial                                 21.0           20.9          21.0        21.6        21.1
 U.S. Plant Fuel                                  4.4            4.4          4.5         4.4          4.4
 U.S. Pipe Distribution                           1.9            1.8          1.8         1.8          1.9
 U.S. Vehicle Fuel                                0.1            0.1          0.1         0.1          0.1
 Total U.S. Consumption                          72.8           67.6          67.5        70.5        68.9
 Total U.S. Demand                               92.0           87.0          86.8        84.1        79.3 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)                                                     
 Hub                                          Current Day     Prior Day                                 
 Henry Hub NG-W-HH-SNL                         4.66           4.71                                    
 Transco Z6 New York NG-CG-NY-SNL              4.37           4.05                                    
 PG&E Citygate NG-CG-PGE-SNL                   6.64           6.12                                    
 Dominion South NG-PCN-APP-SNL                 4.17           3.90                                    
 Chicago Citygate NG-CG-CH-SNL                 4.78           4.49                                    
 Algonquin Citygate NG-CG-BS-SNL               4.50           4.21                                    
 SoCal Citygate NG-SCL-CGT-SNL                 19.75          12.29                                   
 Waha Hub NG-WAH-WTX-SNL                       4.73           4.55 SNL U.S. Power Next-Day Prices ($ per megawatt-hour)                                                   
 Hub                                          Current Day     Prior Day                                 
 New England EL-PK-NPMS-SNL                    47.50          49.75                                   
 PJM West EL-PK-PJMW-SNL                       44.50          35.50                                   
 Ercot North EL-PK-ERTN-SNL                    50.00          54.50                                   
 Mid C EL-PK-MIDC-SNL                         300.00         121.67                                   
 Palo Verde EL-PK-PLVD-SNL                    312.00         138.00                                   
 SP-15 EL-PK-SP15-SNL                         235.00         109.00                                   
 
 (Reporting by Scott DiSavino; editing by Jonathan Oatis)
  
 
 
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