US natgas prices slide 3% from 26-month high on small storage withdrawal

By Scott DiSavino

March 6 (Reuters) - U.S. natural gas futures fell about 3% on Thursday from a 26-year high in the prior session on record output and a federal report showing last week's storage draw was smaller than expected.

The U.S. Energy Information Administration (EIA) said energy firms pulled 80 billion cubic feet (bcf) of gas out of storage during the week ended February 28.

That was much smaller than the 92-bcf withdrawal analysts forecast in a Reuters poll and compares with declines of 56 bcf during the same week last year and a five-year (2020-2024) average draw of 94 bcf for this time of year. EIA/GAS NGAS/POLL

Gas stockpiles, however, remained about 11% below normal levels for this time of year after extreme cold in January and February forced energy firms to pull massive amounts of gas out of storage, including record amounts in January.

Front-month gas futures NGc1 for April delivery on the New York Mercantile Exchange fell 14.8 cents, or 3.3%, to settle at $4.302 per million British thermal units (mmBtu). On Wednesday, the contract closed at its highest since December 2022 for a second day in a row.

Gas prices spiked earlier this week on record flows to liquefied natural gas export (LNG) plants and worries Canada would reduce power and gas exports to the U.S. after U.S. President Donald Trump imposed tariffs on Canada and Mexico on March 4.

In 2024, Canada supplied about 8% of total U.S. gas and about 1% of total U.S. power demand, including exports. The percentages were higher in some U.S. border states and regions, and some of those U.S. exports went to Canada.

SUPPLY AND DEMAND

Average gas output in the Lower 48 U.S. states rose to 105.8 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February, according to LSEG data.

On a daily basis, however, output was on track to decline by 2.4 bcfd over the past six days to a preliminary one-week low of 104.5 bcfd on Thursday, down from a three-week high of 106.9 bcfd on February 28. That compares with an all-time daily high of 107.2 on February 6.

In the import market, Canadian gas exports to the U.S. slid to an average of 8.2 bcfd over the past few days since Trump imposed his tariffs, down from an average of 9.8 bcfd during the prior 11 days (February 21-March 3), according to LSEG data.

That compares with an average of 8.6 bcfd of Canadian gas exports to the U.S. in 2024 and 7.6 bcfd over the prior five years (2019-2023).

Meteorologists projected weather in the Lower 48 states would turn from mostly warmer than normal from March 6-15 to mostly colder than normal from March 16-21.

LSEG forecast average gas demand in the Lower 48, including exports, will fall from 119.2 bcfd this week to 111.0 bcfd next week. Those forecasts were similar to LSEG's outlook on Wednesday.

The amount of gas flowing to the eight big U.S. 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 VG.N 3.2-bcfd Plaquemines LNG export plant under construction in Louisiana enter service.

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: http://graphics.thomsonreuters.com/15/rigcount/index.html

For next-day SNL U.S. gas prices, see: 0#SNL-NG

For next-day SNL U.S. power prices, see: 0#SNL-PWR

For U.S. natgas price and storage polls, see: NGAS/POLL

For U.S. nuclear power outages, see: NUKE/

For U.S. Northwest hydro power report, see: NWRFC

For U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44

For the U.S. natural gas speed guide, see: USGAS

For the U.S. power speed guide, see: USPOWER

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