UPDATE 3-U.S. natgas gain 3% as hot weather offsets Freeport LNG shutdown

(Adds latest prices, quote) June 9 (Reuters) - U.S. natural gas futures gained about 3% on Thursday, erasing earlier losses, on record power demand in Texas this week, a smaller-than-usual storage build, rising spot gas prices, low wind power and a decline in gas production so far this month. Earlier in the day, futures were down about 7% on expectations the fire and explosion that shut the Freeport liquefied natural gas (LNG) export plant in Texas on Wednesday for at least three weeks, raising the risk of global gas shortages especially in Europe. But shortages of LNG around the world means more gas will remain in the United States, giving utilities a chance to rapidly rebuild extremely low stockpiles. Freeport, the second biggest U.S. LNG export plant, consumes about 2 billion cubic feet per day (bcfd) of gas, so a three-week shutdown would result in about 42 billion cubic feet (bcf) more gas being available to the U.S. market. U.S. storage was currently about 15%, or 340 bcf, below normal levels for this time of year, its lowest since April 2019. The U.S. Energy Information Administration (EIA) said utilities added 97 bcf of gas to storage during the week ended June 3. Traders said the build was slightly smaller than usual because power generators burned more gas last week to keep air conditioners humming during a heatwave. That was in line with the 96-bcf build analysts forecast in a Reuters poll and compares with an increase of 98 bcf in the same week last year and a five-year (2017-2021) average increase of 100 bcf. After dropping 6% on Wednesday, front-month gas futures for July delivery rose 26.4 cents, or 3.0%, to settle at $8.963 per million British thermal units (mmBtu). "Natural gas ... seems to have already put the Freeport incident in the rear view mirror," said Robert Yawger, executive director of energy futures at Mizuho. Power demand in Texas will likely set fresh all-time highs every day from June 10-13 as economic growth boosts usage and homes and businesses keep their air conditioners cranked up to escape a lingering heatwave. Even though the weather was seasonally mild in both Pennsylvania and Chicago, next-day gas for Thursday rose to its highest since February 2014 at the Dominion South hub in Pennsylvania and its highest since the February freeze in 2021 in Chicago . Despite this week's drop, U.S. gas futures were still up about 139% so far this year as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia's Feb. 24 invasion of Ukraine stoked fears Moscow might cut gas supplies to Europe. Gas was trading around $27 per mmBtu in Europe and $23 in Asia. That was a 9% gain for European gas prices due to worries about LNG supplies now that Freeport was shut. Refinitiv said average gas output in the U.S. Lower 48 states fell to 94.8 bcfd so far in June from 95.1 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021. The average amount of gas flowing to U.S. LNG export plants fell to 12.4 bcfd so far in June from 12.5 bcfd in May, according to data from Refinitiv. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.6 bcfd of gas into LNG. With the shutdown of Freeport, LNG feedgas fell from a recent high of 12.9 bcfd on Tuesday to around 11.0 bcfd on Wednesday and Thursday, the lowest since mid April. Freeport was pulling in about 2.0 bcfd before the fire. Week ended Week ended Year ago Five-year Jun 3 May 27 Jun 3 average (Actual) (Actual) Jun 3 U.S. weekly natgas storage change (bcf): +97 +90 +98 +100 U.S. total natgas in storage (bcf): 1,999 1,902 2,397 2,339 U.S. total storage versus 5-year average -14.5% -15.1% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 8.25 8.70 3.27 3.73 2.89 Title Transfer Facility (TTF) 27.20 24.74 10.27 16.04 7.49 Japan Korea Marker (JKM) 22.76 22.87 11.58 18.00 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 9 9 5 15 15 U.S. GFS CDDs 197 197 182 150 152 U.S. GFS TDDs 206 206 187 165 167 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 95.5 94.8 95.2 93.1 84.6 U.S. Imports from Canada 7.4 7.9 7.5 7.8 7.7 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 102.9 102.6 102.7 99.9 92.4 U.S. Demand (bcfd) U.S. Exports to Canada 2.7 2.6 2.6 2.2 2.2 U.S. Exports to Mexico 6.0 6.1 6.1 6.7 5.1 U.S. LNG Exports 12.8 12.3 11.4 9.2 4.3 U.S. Commercial 4.6 4.5 4.4 4.5 4.7 U.S. Residential 4.1 3.8 3.6 3.8 4.3 U.S. Power Plant 28.2 33.4 37.2 36.1 32.8 U.S. Industrial 20.7 20.7 20.9 20.6 20.9 U.S. Plant Fuel 4.7 4.7 4.7 4.7 4.7 U.S. Pipe Distribution 1.7 1.8 1.9 1.7 1.8 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 64.2 69.2 72.9 71.5 69.3 Total U.S. Demand 85.7 90.2 93.0 89.6 80.9 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Jun 10 Jun 3 May 27 May 20 May 13 Wind 9 12 12 12 15 Solar 5 4 4 4 4 Hydro 8 7 7 7 7 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 40 36 37 37 34 Coal 20 19 20 20 18 Nuclear 20 19 19 19 19 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 9.43 9.28 Transco Z6 New York 8.35 8.30 PG&E Citygate 10.30 10.08 Dominion South 8.26 8.15 Chicago Citygate 9.02 8.85 Algonquin Citygate 8.60 8.40 SoCal Citygate 10.50 10.20 Waha Hub 8.80 8.82 AECO 6.76 6.64 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day New England 83.25 87.50 PJM West 93.00 109.25 Ercot North 105.50 93.75 Mid C 42.50 48.92 Palo Verde 113.20 102.00 SP-15 96.75 85.00 (Reporting by Scott DiSavino Editing by Nick Zieminski, Marguerita Choy and David Gregorio)