US natural gas futures on Thursday fell on forecasts for warmer weather and lower heating demand over the next two weeks, despite an increase in liquefied natural gas (LNG) exports and a report showing a near-normal weekly storage draw.
The US Energy Information Administration (EIA) said utilities pulled 109 billion cubic feet (bcf) of gas from storage during the week ended February 28. That was in line with the 108-bcf draw analysts forecast in a Reuters poll and compares with a decline of 152 bcf during the same week last year and a five-year (2015-19) average reduction of 106 bcf for the period.
The decrease for the week ended February 28 cut stockpiles to 2.091 trillion cubic feet (tcf), 9.2% above the five-year average of 1.915 tcf for this time of year.
After rising over 8% earlier this week, front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.5 cents, or 3.0%, to settle at $1.772 per million British thermal units.
Despite gains earlier this week, gas prices were still down 39% since hitting an eight-month high of $2.905 per mmBtu in early November because record production and mild winter weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely.
With the coming of spring-like weather, Refinitiv, a data provider, projected average demand in the US Lower 48 states, including exports, would ease from 109.7 billion cubic feet per day (bcfd) this week to 104.4 bcfd next week. That is lower than Refinitiv's forecast on Wednesday of 105.0 bcfd for next week.
The amount of gas flowing to US LNG export plants, meanwhile, was on track to rise from 7.3 bcfd on Wednesday to 7.7 bcfd on Thursday, according to preliminary data from Refinitiv, as gas flow to Cheniere Energy Inc's Sabine Pass facility in Louisiana increases as fog cleared and vessels started to enter the terminal for the first time since Sunday.
Traders are watching gas flows to US LNG export plants for declines after customers canceled a couple of cargoes for April as low prices in Europe and Asia - because of record-high storage in Europe and lower demand in China due to the coronavirus - made it uneconomical for some European customers to lift cargoes.
With demand from US power generators and industrial firms expected to decline or steady in coming years, producers are counting on LNG exports to maintain their spectacular growth in coming years to absorb record amounts of gas associated with oil production from shale formations.
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