UPDATE 1-US natgas prices fall 4% to fresh 3-year low on weak demand

(Adds latest prices) By Scott DiSavino Feb 12 (Reuters) - U.S. natural gas futures fell about 4% on Monday to a three-year low on near-record output, ample fuel in storage, a lower heating demand forecast for next week and slipping global gas prices. Also, traders noted, gas flows to U.S. liquefied natural gas (LNG) export plants will remain low so long as a liquefaction unit at Freeport LNG's facility in Texas stays shut. The combination of near-record production and mostly warmer-than-usual weather and low heating demand so far this winter, other than mid-January's Arctic freeze, has allowed utilities to leave more gas in storage. Analysts forecast inventories were currently about 15% above normal levels for this time of year. Energy traders said low prices usually encourage power generators to burn more gas instead of coal and prompts producers to cut back on gas drilling. But with the retirement of dozens of coal plants in recent years, there's not much coal left to replace. At the same time, renewable sources of power like wind and solar continue to take market share from fossil fuels. As for production, even if energy firms reduce gas drilling, gas output will likely still rise because oil prices are high enough to encourage producers to seek more oil in shale basins like the Permian in Texas and New Mexico and Bakken in North Dakota. Those shale oil basins also produce a lot of associated gas when that oil comes out of the ground. Front-month gas futures for March delivery on the New York Mercantile Exchange fell 7.9 cents, or 4.3%, to settle at $1.768 per million British thermal units (mmBtu), their lowest close since July 2020. SUPPLY AND DEMAND Financial company LSEG said gas output in the U.S. Lower 48 states rose to an average of 105.8 billion cubic feet per day (bcfd) so far in February, up from 102.1 bcfd in January, but still short of the monthly record high of 106.3 bcfd in December. Meteorologists projected the weather in the Lower 48 states would turn from warmer than normal now to colder than normal on Saturday and Sunday, Feb. 17-18, before returning to normal- to warmer-than-normal levels from Feb. 19-27. With seasonally colder weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 124.1 bcfd this week to 129.3 bcfd next week. The forecast for this week was higher than LSEG's outlook on Friday, while its forecast for next week was lower. Gas flows to the seven big U.S. LNG export plants slid to an average of 13.6 bcfd so far in February, down from 13.9 bcfd in January and a monthly record of 14.7 bcfd in December. Analysts do not expect U.S. LNG feedgas to return to record levels until Freeport LNG is back at full power, which could occur in mid- to late-February. The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine. Gas was trading at an eight-month low of around $8 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and around $9 at the Japan Korea Marker (JKM) benchmark in Asia. Week ended Week ended Year ago Five-year Feb 9 Feb 2 Feb 9 average Forecast Actual Feb 9 U.S. weekly natgas storage change (bcf): -75 -75 -117 -149 U.S. total natgas in storage (bcf): 2,509 2,584 2,280 2,187 U.S. total storage versus 5-year average 14.7% 10.6% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2023 (2018-2022) Henry Hub 1.81 1.85 2.44 2.66 3.60 Title Transfer Facility (TTF) 8.22 8.48 16.52 13.04 14.39 Japan Korea Marker (JKM) 9.44 9.45 16.87 14.39 14.31 LSEG 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 362 358 337 389 386 U.S. GFS CDDs 3 2 14 7 6 U.S. GFS TDDs 369 361 351 396 404 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year (2019-2023) Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 105.8 106.1 106.3 102.0 92.4 U.S. Imports from Canada 9.2 8.7 9.4 8.7 9.1 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.2 Total U.S. Supply 115.0 114.8 115.8 110.7 101.7 U.S. Demand (bcfd) U.S. Exports to Canada 3.6 3.6 3.6 3.1 2.7 U.S. Exports to Mexico 6.2 6.1 6.2 5.1 5.2 U.S. LNG Exports 13.3 13.9 13.8 13.2 8.4 U.S. Commercial 13.8 13.7 15.4 14.0 16.3 U.S. Residential 22.3 21.9 25.1 22.9 27.6 U.S. Power Plant 31.0 32.3 31.9 29.5 29.3 U.S. Industrial 24.4 24.5 25.1 24.4 25.4 U.S. Plant Fuel 5.2 5.2 5.3 5.2 5.3 U.S. Pipe Distribution 2.6 2.7 2.8 2.6 2.7 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 99.4 100.5 105.7 98.7 106.7 Total U.S. Demand 122.5 124.1 129.3 120.1 123.0 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 78 77 83 107 81 Jan-Jul 79 79 77 102 79 Oct-Sep 80 80 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Feb 16 Feb 9 Feb 2 Jan 26 Jan 19 Wind 11 14 9 7 10 Solar 3 3 3 2 2 Hydro 7 7 7 6 6 Other 1 1 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 39 38 40 43 39 Coal 15 16 18 22 23 Nuclear 23 21 20 19 17 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.74 1.74 Transco Z6 New York 1.38 1.41 PG&E Citygate 3.29 3.50 Eastern Gas (old Dominion South) 1.30 1.53 Chicago Citygate 1.66 1.60 Algonquin Citygate 1.85 1.81 SoCal Citygate 2.88 2.91 Waha Hub 1.26 1.23 AECO 1.26 1.31 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 24.00 30.00 PJM West 20.00 21.00 Ercot North 15.25 20.00 Mid C 47.00 56.67 Palo Verde 24.75 35.50 SP-15 36.00 34.75 (Reporting by Scott DiSavino; Editing by Kirsten Donovan and David Gregorio)