NEW YORK: US natural gas futures fell about 3% on Thursday on forecasts for milder weather and less demand next week than previously expected, which should keep the amount of gas utilities need to pull from storage low in coming weeks.
Front-month gas futures for April delivery on the New York Mercantile Exchange fell 10.6 cents, or 2.5%, to $4.141 per million British thermal units (mmBtu) by 9:07 a.m. EDT (1307 GMT). On Wednesday, the contract closed at its highest since March 11.
The price decline came ahead of a federal storage report expected to show utilities pulled less gas out of storage than usual during mild weather last week.
Analysts projected utilities pulled 3 billion cubic feet (bcf) of gas out of storage during the week ended March 14.
That compares with an increase of 5 bcf during the same week last year and a five-year average draw of 31 bcf for this time of year.
Gas stockpiles, however, were still around 11% below normal levels for this time of year after extreme cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January.
Financial firm LSEG said average gas output in the Lower 48 US states rose to 105.8 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February.
On a daily basis, however, output over the past three days was on track to drop by around 2.4 bcfd to a preliminary three-week low of 104.4 bcfd on Thursday.
Traders said the daily drop was likely related to spring pipeline maintenance in Texas and other states, which helped cause spot prices at the Waha Hub in West Texas to turn negative in recent days. The traders noted that preliminary output data is often updated later in the day.
Meteorologists projected weather in the Lower 48 states would remain mostly near normal through April 4.
LSEG forecast average gas demand in the Lower 48, including exports, will rise from 106.8 bcfd this week to 107.9 bcfd next week. The forecast for next week was lower than LSEG’s outlook on Wednesday.
The amount of gas flowing to the eight big operating US LNG export plants rose to an average of 15.7 bcfd so far in March, up from a record 15.6 bcfd in February, as new units at Venture Global’s 3.2-bcfd Plaquemines LNG export plant under construction in Louisiana enter service.
The US became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
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