US natgas prices leap 23% on cold forecasts, rising LNG feedgas

Dec 30 (Reuters) - U.S. natural gas futures soared more than 23% on Monday to mark their biggest daily percentage increase in two months, fueled by forecasts for more cold weather in January and an increased amount of gas flowing to liquefied natural gas (LNG) export plants.

On its first day as the front-month, gas futures NGc1 for February delivery on the New York Mercantile Exchange surged 78.4 cents, or 23.2%, to $4.17 per million British thermal units as of 9:57 am EST, in its biggest daily percentage increase since end-October.

Prices are trading at their highest level since January 2023 and are set for a 60% gain so far this year, the biggest annual gain since 2005.

"Natural gas bulls continue to find strength in the weather outlooks for January, with deep cold draped across the eastern portion of the U.S.," said Gary Cunningham, director of market research at Tradition Energy, adding that deep cold for the first two weeks of the New Year includes a plunge below freezing for much of Texas and temperatures in the single digits for Chicago.

Financial firm LSEG estimated 499 heating degree days over the next two weeks, compared with 399 estimated on Friday. It also forecast average gas demand in the Lower 48, including exports, jumping to 148.4 bcfd this week from 120.2 bcfd last week.

"We are also seeing strong demands from LNG export facilities continue, with global demands for the fuel expected to remain high as output cuts from some North Sea assets should keep European buyers actively seeking cargoes to maintain storage levels, which have already fallen to ~60% of full in some regions," Cunningham added.

The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 14.8 billion cubic feet per day (bcfd) so far in December from 13.6 bcfd in November. LSEG said average gas output in the Lower 48 U.S. states rose to 103.3 bcfd so far in December from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.

Earlier in the day, Cheniere Energy LNG.N said that liquefied natural gas (LNG) was produced for the first time from the first train (Train 1) of the company’s Corpus Christi Stage 3 Liquefaction Project.

That comes after Venture Global LNG's tanker Venture Bayou departed the Plaquemines export plant in Louisiana for Germany last week, carrying the first LNG cargo produced at the facility.

Dutch and British wholesale gas prices were stable early on Monday as high output from wind and solar farms curbed demand for gas-fired power, offsetting nervousness about the expected end of Russian gas supplies to Europe via Ukraine. NG/EU

"With temperatures turning appreciably colder as this week progresses across the eastern half of the U.S. with extension of below normal trends toward mid-January according to some forecasts, the newly prompt February contract has pushed assertively through key resistance at the $3.55 level in keeping this month’s strong upside price acceleration much intact," energy advisory firm Ritterbusch and Associates said in a note.

(Reporting by Anushree Mukherjee in Bengaluru, additional reporting by Swati Verma; Editing by Sharon Singleton)

((anushree.ashishMukherjee@thomsonreuters.com;))

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