Jan 20 (Reuters) - U.S. natural gas futures dropped to a near one-week low in holiday-thinned trade on Monday on forecasts of less cold weather starting late January, even as spot rates climbed as frigid cold conditions for most of the U.S. boosted demand for heating.

Front-month gas futures for February delivery on the New York Mercantile Exchange fell 15.2 cents, or 3.8%, to $3.80 per million British thermal units (MMBtu) at 10:30 a.m. EST (1530 GMT), its lowest since Jan. 14. Trading volumes are low due to U.S. markets being closed for the Martin Luther King Jr. Day holiday and ahead of U.S. President-elect Donald Trump's inauguration later in the day.

"Spot prices kind of went crazy responding to extremely cold weather over the weekend and the next several days," said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City.

"I think the futures price decline is a price correction, reflecting the market's reassessment of the impact of the colder than normal weather for January in the longer term."

The February contract closed at its highest level since Dec. 30, 2022 last week as cold weather over the weekend was on track to cut output by freezing gas wells and pipes and boost usage of the fuel to heat homes and businesses to record highs.

A mass of Arctic air will filter south and east through the early part of this week, triggering a rare and significant winter storm across Texas, the Gulf Coast, and the Southeast, the National Weather Service said, adding that this cold snap is expected to set multiple daily record low temperatures.

In the spot market, extreme cold weather boosted next-day gas prices to their highest since January 2024 at several hubs including the U.S. Henry Hub benchmark in Louisiana, which more than doubled from Friday to hit $9.86 per MMBtu, and the Transco Z6 New York , which increased more than nine-fold from Friday to hit 42.855 MMBtu.

Financial firm LSEG forecast total gas use, including exports, will soar to 166.9 bcfd on Monday and is expected to rise to 170 bcf bcfd on Tuesday. If that happens, demand on Jan. 21 would top the current daily record high of 168.4 bcfd, hit on Jan. 16, 2024.

On a weekly basis, LSEG forecast average gas demand in the Lower 48, including exports, would rise to 151.6 bcfd this week from 145.5 bcfd last week.

After utilities pulled a massive 258 billion cubic feet (bcf) of gas out of storage during the week ended Jan. 10, analysts projected energy firms would keep pulling over 200 bcf of gas during the weeks ending Jan. 17 and Jan. 24 to meet soaring heating demand.

There is currently about 3% more gas in storage than usual for the time of year. Storage withdrawals this month could remove that surplus by the end of January, which would be the first time stockpiles would fall below the five-year average since January 2022.

LSEG said average gas output in the Lower 48 U.S. states fell from 104.2 billion cubic feet per day (bcfd) in December to 103 bcfd so far in January due mostly to freezing oil and gas wells and pipes, known as freeze-offs.

Gas flows to U.S. LNG export plants was at an average of 14.2 bcfd so far in January, compared with 14.4 bcfd in December and a monthly record high of 14.7 bcfd in December 2023.

Meteorologists projected that weather in the Lower 48 states would remain mostly colder than normal through Jan. 26, before turning mostly near normal from Jan. 27- Feb. 1.

"Natural gas is down as the forecasts for later in the month have trended lower. While we will see significant withdrawals from inventory, hopes of a warm up is easing concerns that we will see storage surpluses disappear," said Phil Flynn, an analyst at Price Futures Group.

Week ended Week ended Year ago Five-year

Jan 17 Jan 10 Jan 17 average

Forecast Actual Jan 17

U.S. weekly natgas storage change (bcf): -240 -258 -277 -167

U.S. total natgas in storage (bcf): 2,875 3,115 2,949 2,871

U.S. total storage versus 5-year average 0.0% 2.5%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five-Year

Last Year Average Average

2024 (2019-2023)

Henry Hub 2.72 2.41 3.52

3.8 4.08

Title Transfer Facility (TTF) 9.55 10.95 15.47

14.19 14.10

Japan Korea Marker (JKM) 10.32 11.89 15.23

13.78 13.75

LSEG Heating $(HDD.UK)$, Cooling $(CDD.AU)$ 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

483 502 485 440 444

U.S. GFS CDDs

2 1 3 3 3

U.S. GFS TDDs

485 503 488 443 447

LSEG U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Next Week This Week Five-Year

Week Last Year (2020-2024)

Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 100.0 96.7

102.1 101.5 101.9

U.S. Imports from Canada N/A 9.1

10.6 10.6 9.2

U.S. LNG Imports 0.1 0.2

0.0 0.0 0.0

Total U.S. Supply N/A 106.0

112.7 112.1 111.1

U.S. Demand (bcfd)

U.S. Exports to Canada N/A 3.0

2.6 2.3 2.4

U.S. Exports to Mexico N/A 5.6

6.1 5.9 5.6

U.S. LNG Exports 12.4 11.6

14.1 14.4 14.6

U.S. Commercial 22.3 16.4

19.5 21.9 18.5

U.S. Residential 39.2 28.4

33.3 38.6 31.9

U.S. Power Plant 37.0 31.4

34.7 32.6 30.7

U.S. Industrial 27.9 25.7

26.7 27.4 26.1

U.S. Plant Fuel 5.0 5.2

5.0 5.0 5.0

U.S. Pipe Distribution 3.3 4.1

3.3 3.4 3.1

U.S. Vehicle Fuel 0.1 0.2

0.1 0.1 0.1

Total U.S. Consumption 134.8 111.4

122.6 129.0 115.4

Total U.S. Demand N/A 131.6

145.5 151.6 138.1

N/A is Not Available

U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam 2025 2025 2024 2023 2022

(Fiscal year ending Sep 30) Current Day Prior Day % of Normal % of Normal % of Normal

% of Normal % of Normal Actual Actual Actual

Forecast Forecast

Apr-Sep 84 85 74 83 107

Jan-Jul 82 83 76 77 102

Oct-Sep 845 85 77 76 103

U.S. weekly power generation percent by fuel - EIA

Week ended Week ended 2024 2023 2022

Jan 17 Jan 10

Wind 10 11 10 11

Solar 3 5 4 3

Hydro 5 6 6 6

Other 1 1 2 2

Petroleum 0 0 0 0

Natural Gas 39 42 41 38

Coal 23 16 17 21

Nuclear 18 19 19 19

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

Hub Current Day Prior Day

Henry Hub

9.86 4.30

Transco Z6 New York

42.86 4.27

PG&E Citygate

4.89 4.59

Eastern Gas (old Dominion South)

8.97 3.99

Chicago Citygate

9.99 3.98

Algonquin Citygate

24.09 14.00

SoCal Citygate

7.51 4.73

Waha Hub

7.96 3.84

AECO

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

Hub Current Day Prior Day

New England 126.67 140.23

PJM West 44.79 55.21

Mid C 80.61 55.27

Palo Verde 78.00 32.24

SP-15 61.70 34.19

(Reporting by Anjana Anil and Swati Verma in Bengaluru; Editing by Susan Fenton)

((Anjana.Anil@thomsonreuters.com;))

((For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down. For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminal For graphics on Baker Hughes rig counts, see: For next-day SNL U.S. gas prices, see: For next-day SNL U.S. power prices, see: For U.S. natgas price and storage polls, see: For U.S. nuclear power outages, see: For U.S. Northwest hydro power report, see: For U.S./Canada natural gas rig count vs Henry Hub futures price, see: For the U.S. natural gas speed guide, see: For the U.S. power speed guide, see: To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined ) plus (ICE Henry Hub options and futures combined divided by four) plus (NYMEX Henry Hub swaps options and futures combined divided by four) plus (NYMEX Henry Hub penultimate gas swaps divided by four) NYMEX Henry Hub options and futures combined NYMEX Henry Hub futures only ICE Henry Hub options and futures combined NYMEX Henry Hub swaps options and futures combined NYMEX Henry Hub Penultimate gas swaps ))