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UPDATE 2-U.S. natgas soars 13 pct as volatility returns with frigid forecasts

(Adds latest prices, quote) Jan 14 (Reuters) - U.S. natural gas futures surged nearly 13 percent on Monday on forecasts for much colder weather through the end of January than previously expected, sparking a return of extreme volatility seen at the end of last year. In their latest predictions, meteorologists said the weather would turn intensely cold starting around Jan. 19 and remain frigid across much of the country through at least the end of the month. "This (weather) pattern could easily extend into February and bring several weeks of sustained cold and elevated heating demand, resulting in the largest storage withdrawals so far this season," Daniel Myers, market analyst at Gelber & Associates in Houston, said in a report, noting "The market will again feel pressure from low storage inventories in the coming weeks." Those cold forecasts and concerns about the low amount of gas in inventory revived the extreme volatility seen at the end of 2018 after the market slumbered for the first couple of warmer-than-normal weeks of the new year and utilities took a break from big storage withdrawals. Front-month gas futures for February delivery on the New York Mercantile Exchange were up 39.6 cents, or 12.8 percent, at $3.495 per million British thermal units at 12:58 p.m. EST (1758 GMT), their highest since Dec. 28. That puts the contract on track for its biggest daily percentage gain in eight weeks and marks the second session in a row that it moved over 5 percent since the start of the year. In the last two months of 2018, the contract rose or fell by more than 5 percent 27 times. With more cold coming, Refinitiv projected demand for gas in the Lower 48 states would rise to 125.9 billion cubic feet per day (bcfd) next week, up from a forecast 124.5 bcfd on Friday. That compares with an expected 116.5 bcfd this week. Traders said intense volatility late last year was due to a combination of changing weather forecasts and concerns about low stockpiles. But weeks of warmer-than-usual weather in December and early January allowed utilities to cut the vast storage deficit from 21 percent a few weeks ago to just 15 percent now by leaving more fuel in underground storage facilities. If the cold weather materializes next week, traders said utilities will have to start pulling massive amounts of gas out of storage again to meet rising heating demand. Analysts said utilities likely pulled a smaller-than-normal 71 billion cubic feet of gas from inventories during the warm week ended Jan. 11. That compares with declines of 208 bcf during the same week last year and a five-year average decrease of 218 bcf for the period. If correct, the withdrawal for the week ended Jan. 11 would cut stockpiles to 2.543 trillion cubic feet, 11.1 percent below the five-year average of 2.860 tcf for this time of year and the lowest for the week since 2014. Gas output in the Lower 48 has averaged near a record high of 86.8 bcfd over the past 30 days. On a daily basis, production eased to 87.0 bcfd on Sunday from a recent high of 87.4 bcfd on Friday, according to Refinitiv data. That is well short of the all-time daily output high of 88.8 bcfd on Nov. 30.

Week ended Week ended Year ago Five-year

Jan. 11 Jan. 4 Jan. 11 average(Actual) (Actual) Jan. 11U.S. natgas storage (bcf): -71 -87 -208


Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast Current Prior Day Prior10-Year 30-YearDay Year Norm NormU.S. GFS HDDs 433 493 428448 458U.S. GFS CDDs 1 1 2 3 2U.S. GFS TDDs 534 494 430450 460

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Next This week Five-YearWeek Week last year Average

For Month U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 86.6 86.8 86.676.2 71.5U.S. Imports from Canada 8.9 8.9 8.99.9 9.1U.S. LNG Imports 0.1 0.2 0.10.5 0.4Total U.S. Supply 95.6 96.0 95.686.6 81.0

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 2.8 2.82.8 2.3U.S. Exports to Mexico 4.9 4.7 4.84.3 3.1U.S. LNG Exports 4.9 4.9 5.22.4 0.8U.S. Commercial 14.5 17.1 19.719.1 17.0U.S. Residential 24.2 29.4 34.433.8 30.1U.S. Power Plant 22.8 25.2 25.627.4 23.7U.S. Industrial 24.3 25.3 26.325.1 23.2U.S. Plant Fuel 4.3 4.3 4.34.3 4.3U.S. Pipe Distribution 2.3 2.3 2.82.3 2.3U.S. Vehicle Fuel 0.1 0.1 0.10.1 0.1Total U.S. Consumption 92.4 104.0 113.2112.1 100.7Total U.S. Demand 105.0 116.5 125.9121.6 106.9

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Prior Day


Henry Hub <NG-W-HH-SNL> 2.89 2.95Transco Z6 New York <NG-CG-NY-SNL> 3.88 5.26Dominion South <NG-PCN-APP-SNL> 2.58 2.66Chicago Citygate <NG-CG-CH-SNL> 2.72 2.71Algonquin Citygate <NG-CG-BS-SNL> 5.25 6.81SoCal Citygate <NG-SCL-CGT-SNL> 4.30 4.95Waha Hub <NG-WAH-WTX-SNL> 1.82 2.00

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Prior Day


New England <EL-PK-NPMS-SNL> 45.75 53.50PJM West <EL-PK-PJMW-SNL> 37.75 39.00Ercot North <EL-PK-ERTN-SNL> 23.00 22.75Mid C <EL-PK-MIDC-SNL> 29.50 26.40Palo Verde <EL-PK-PLVD-SNL> 30.63 36.50SP-15 <EL-PK-SP15-SNL> 37.50 39.00

(Reporting by Scott DiSavino Editing by Chizu Nomiyama and Marguerita Choy)