US natural gas futures rose on Thursday with a 23% jump in oil prices and a slightly bigger than expected weekly storage draw after three days of losses drove gas to its lowest in 24 years. Traders noted the increase came despite forecasts for demand over the next two weeks to fall as pipeline flows to liquefied natural gas (LNG) export terminals decline.
The US Energy Information Administration (EIA) said utilities pulled 9 billion cubic feet (bcf) of gas from storage during the week ended March 13. That is more than the 6-bcf draw analysts forecast in a Reuters poll and compares with a decline of 91 bcf during the same week last year and a five-year (2015-19) average reduction of 63 bcf for the period.
The decrease for the week ended March 13 cut stockpiles to 2.034 trillion cubic feet (tcf), 16.0% above the five-year average of 1.753 tcf for this time of year. After falling to its lowest since September 1995 on Wednesday, front-month gas futures for April delivery on the New York Mercantile Exchange rose 5.0 cents, or 3.1%, to settle at $1.654 per million British thermal units.
Oil prices, meanwhile, soared over 20% on Thursday, recouping most of their losses from a sell-off that drove prices to near 20-year lows on Wednesday.
Even before the coronavirus started to spread, gas prices were already trading near their lowest in years as record production and months of mild weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely this winter.
Now with the coming of milder spring-like weather, data provider Refinitiv projected gas demand in the US Lower 48 states, including exports, would slide from an average of 104.2 billion cubic feet per day (bcfd) this week to 103.0 bcfd next week. That is a big decline from Wednesday's outlook when Refinitiv forecast demand would rise from 104.4 bcfd this week to 105.3 bcfd next week.
Most of that demand drop comes from lower LNG exports. The amount of gas expected to flow to LNG export plants was on track to rise to 7.1 bcfd on Thursday from a near five-month low of 6.5 bcfd on Wednesday, according to early estimates from Refinitiv. On Wednesday, that data was pointing to flows of 8.3 bcfd on Wednesday.
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