(Adds EIA storage data, updates prices at 10:44 EDT (1444 GMT)) July 7 (Reuters) - U.S. natural gas futures climbed about 2% on Friday on forecasts for the weather to remain hotter-than-normal through late July, especially in Texas, and rising feedgas to the nation's liquefied natural gas (LNG) export plants. That price increase came even though U.S. drillers were pulling record amounts of gas out of the ground and a bigger-than-expected storage build last week. The Electric Reliability Council of Texas (ERCOT), the state's power grid operator, projected another heatwave next week would boost electricity use to a record high on Wednesday, July 12. Generators burn gas to produce power for air conditioning, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear (8%) and solar (4%), according to federal energy data. The U.S. Energy Information Administration (EIA) said utilities added 68 billion cubic feet (bcf) of gas into storage during the week ended June 30. That was bigger than the 64-bcf build analysts forecast in a Reuters poll and compares with an increase of 63 bcf in the same week last year and a five-year (2018-2022) average increase of 64 bcf. The 68-bcf build was the implied flow before a 4-bcf reclassification from base gas to working gas in the Nonsalt South Central region. Front-month gas futures for August delivery on the New York Mercantile Exchange rose 4.4 cents, or 1.7%, to $2.653 per million British thermal units (mmBtu) at 10:44 a.m. EDT (1444 GMT). On Thursday, the contract closed at its lowest since June 28 for a second day in a row. For the week, the contract was down about 5% after rising around 3% last week. That would be the front-month's first weekly decline in five weeks. The lack of big price moves in recent weeks has cut historic or actual 30-day close-to-close futures volatility to 59.4%, its lowest since April 2022. On a daily basis, historic volatility hit a record high of 177.7% in February 2022 and a record low of 7.3% in June 1991. So far this year, historic volatility has averaged 85.8%. That compares with an annual record high of 92.8% in 2022 and a five-year (2018-2022) average of 57.9%. Oil majors Shell PLC and Exxon Mobil Corp both said the drop in gas prices around the world would "significantly lower" their second quarter earnings. After hitting record highs in 2022, gas prices so far this year have plunged about 55% at the Dutch Title Transfer Facility (TTF) benchmark in Europe, 59% at the Japan Korea Marker (JKM) benchmark in Asia and 41% at the U.S. Henry Hub benchmark in Louisiana. SUPPLY AND DEMAND Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 102.2 billion cubic feet per day (bcfd) so far in July, up from 100.9 bcfd in June and on track to top the monthly record high of 101.9 bcfd in May. That production increase came even though drillers have cut the number of oil and gas rigs operating for nine weeks in a row. Meteorologists forecast weather in the Lower 48 states would remain near normal until July 10 before turning hotter-than-normal through at least July 22. With higher temperatures coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 103.1 bcfd this week and next to 106.9 bcfd in two weeks. The forecasts for this week and next were similar to Refinitiv's outlook on Thursday. Gas flows to the seven big U.S. LNG export plants rose to an average of 13.1 bcfd so far in July from 11.5 bcfd in June. That was still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas. Week ended Week ended Year ago Five-year Jun 30 Jun 23 Jun 30 average Actual Actual Jun 30 U.S. weekly natgas storage change (bcf): 68 76 63 64 U.S. total natgas in storage (bcf): 2,877 2,805 2,302 2,511 U.S. total storage versus 5-year average 14.6% 14.6% 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 2.64 2.61 7.19 6.54 2.89 Title Transfer Facility (TTF) 10.53 10.37 51.76 40.50 7.49 Japan Korea Marker (JKM) 12.08 12.10 39.36 34.11 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 2 4 2 3 4 U.S. GFS CDDs 240 238 230 209 201 U.S. GFS TDDs 242 242 232 212 205 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 100.6 102.1 102.2 97.6 90.5 U.S. Imports from Canada 8.0 7.9 7.9 8.5 8.2 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 108.6 110.0 110.1 106.1 98.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.0 2.3 2.4 2.2 2.4 U.S. Exports to Mexico 6.6 6.5 6.6 6.0 5.5 U.S. LNG Exports 11.8 13.0 12.9 11.1 6.1 U.S. Commercial 4.4 4.3 4.4 4.3 4.5 U.S. Residential 3.7 3.4 3.6 3.5 3.6 U.S. Power Plant 40.6 45.0 44.6 41.4 41.7 U.S. Industrial 21.3 21.3 21.3 21.1 21.1 U.S. Plant Fuel 5.0 5.0 5.0 5.0 5.0 U.S. Pipe Distribution 2.1 2.2 2.2 2.2 2.2 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 77.2 81.3 81.2 77.6 78.2 Total U.S. Demand 97.6 103.1 103.1 96.9 92.2 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2022 2021 2020 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 83 83 107 81 103 Jan-Jul 78 78 102 79 98 Oct-Sep 76 76 103 81 95 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jul 7 Jun 30 Jun 23 Jun 16 Jun 9 Wind 6 10 9 8 5 Solar 4 4 4 5 5 Hydro 6 6 6 6 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 45 43 42 43 45 Coal 19 18 17 16 17 Nuclear 18 17 19 19 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 2.50 2.65 Transco Z6 New York 1.61 1.83 PG&E Citygate 3.85 3.94 Eastern Gas (old Dominion South) 1.42 1.41 Chicago Citygate 2.15 2.34 Algonquin Citygate 4.30 7.65 SoCal Citygate 3.19 3.55 Waha Hub 2.14 2.32 AECO 1.83 1.82 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 75.50 103.75 PJM West 45.00 41.50 Ercot North 27.50 30.00 Mid C 63.75 91.10 Palo Verde 30.25 30.50 SP-15 29.75 31.00 (Reporting by Scott DiSavino; Editing by Emelia Sithole-Matarise and Barbara Lewis)
