US natgas prices slide 3% on forecasts for lower demand, ahead of storage report

By Scott DiSavino

March 20 (Reuters) - U.S. 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 NGc1 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. EIA/GAS NGAS/POLL

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.

SUPPLY AND DEMAND

Financial firm LSEG said 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.

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 NG-WAH-WTX-SNL 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 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.

The U.S. 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.

Gas was trading around $14 per mmBtu at both the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and the Japan Korea Marker (JKM) JKMc1 benchmark in Asia. NG/EU

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

To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)

NYMEX Henry Hub options and futures combined 0#3CFTC023651

NYMEX Henry Hub futures only 0#1CFTC023651

ICE Henry Hub options and futures combined 0#3CFTC023391

NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565B

NYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C