US natural gas prices drop 6% to two-week low on surprise storage build, lower demand

By Scott DiSavino

(Reuters) -U.S. natural gas futures dropped about 6% to a two-week low on Thursday on a surprise storage build and forecasts for milder weather and less demand next week than previously expected.

Energy traders noted that forecast decline in gas demand should allow utilities to keep adding the fuel to storage in the coming weeks.

Front-month gas futures for April delivery on the New York Mercantile Exchange fell 27.2 cents, or 6.4%, to settle at $3.975 per million British thermal units (mmBtu), their lowest close since February 28.

The U.S. Energy Information Administration (EIA) said utilities added 9 billion cubic feet (bcf) of gas out of storage during the week ended March 14.

That was a surprise build versus the draw of 3 bcf that analysts forecast in a Reuters poll and 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]

Despite the storage build, gas stockpiles were still around 10% below normal levels for this time of year after extremely 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 has risen 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 U.S. LNG export plants has risen 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 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) benchmark in Europe and the Japan Korea Marker (JKM) benchmark in Asia. [NG/EU]

  Week Week Year Five-  

ended ended ago year  

Mar Mar 7 Mar avera

14 Actua 14 ge

Actua l Mar

l 14

U.S. weekly natgas storage +9 -62 +5 -31  

change (bcf):

U.S. total natgas in storage 1,707 1,698 2,331 1,897  

(bcf):

U.S. total storage versus -10.0 -11.9      

5-year average % %

Global Gas Benchmark Futures Curre Prior This Prior Five-

($ per mmBtu) nt Day Month Year Year

Day Last Avera Avera

Year ge ge

2024 (2019

-2023

)

Henry Hub 4.18 4.25 1.75 2.41 3.52

Title Transfer Facility 13.67 13.97 8.54 10.95 15.47

(TTF)

Japan Korea Marker (JKM) 13.78 13.11 8.95 11.89 15.23

LSEG Heating (HDD), Cooling          

(CDD) and Total (TDD) Degree

Days

Two-Week Total Forecast Curre Prior Prior 10-Ye 30-Ye

nt Day Year ar ar

Day Norm Norm

U.S. GFS HDDs 231 235 255 246 240

U.S. GFS CDDs 25 21 10 20 18

U.S. GFS TDDs 256 256 265 266 258

LSEG U.S. Weekly GFS Supply          

and Demand Forecasts

  Prior Curre Next This Five-

Week nt Week Week Year

Week Last (2020

Year -2024

)Aver

age

For

Month

U.S. Supply (bcfd)          

U.S. Lower 48 Dry Production 105.7 105.7 105.5 101.6 97.5

U.S. Imports from Canada 9.1 8.8 9.1 N/A 7.8

U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1

Total U.S. Supply 114.7 114.5 114.6 N/A 105.4

U.S. Demand (bcfd)          

U.S. Exports to Canada 3.8 4.0 4.0 N/A 3.3

U.S. Exports to Mexico 6.2 5.8 6.2 N/A 5.4

U.S. LNG Exports 15.5 16.0 15.8 13.1 11.8

U.S. Commercial 11.2 10.3 10.8 11.9 11.8

U.S. Residential 17.2 15.6 15.8 17.7 18.3

U.S. Power Plant 25.9 24.1 23.9 30.8 27.5

U.S. Industrial 23.7 23.5 23.8 24.5 23.8

U.S. Plant Fuel 5.2 5.2 5.2 5.2 5.2

U.S. Pipe Distribution 2.3 2.2 2.2 2.5 3.3

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.2

Total U.S. Consumption 85.6 81.0 81.9 92.7 90.1

Total U.S. Demand 111.1 106.8 107.9 N/A 110.6

N/A is Not Available          

U.S. Northwest River 2025 2025 2024 2023 2022

Forecast Center (NWRFC) at Curre  Prio % of % of % of

The Dalles Dam (Fiscal year nt r Day Norma Norma Norma

ending Sep 30) Day % of l l l

% of Norma Actua Actua Actua

Norma l l l l

l Forec

Forec ast

ast

Apr-Sep  92 93 74 83 107

Jan-Jul 89 89 76 77 102

Oct-Sep 90 90 77 76 103

U.S. weekly power generation          

percent by fuel - EIA

  Week Week 2024 2023 2022

ended ended

Mar Mar

21 14

Wind 18 15 11 10 11

Solar 6 7 5 4 3

Hydro 7 7 6 6 6

Other 1 1 1 2 2

Petroleum 0 0 0 0 0

Natural Gas 33 34 42 41 38

Coal 14 16 16 17 21

Nuclear 20 20 19 19 19

SNL U.S. Natural Gas          

Next-Day Prices ($ per

mmBtu)

Hub Curre Prior      

nt Day

Day

Henry Hub 4.21 4.17      

Transco Z6 New York  3.34 3.10      

PG&E Citygate  3.86 3.83      

Eastern Gas (old Dominion  3.33 3.05      

South)

Chicago Citygate  3.69 3.34      

Algonquin Citygate  3.54 3.38      

SoCal Citygate  3.88 3.82      

Waha Hub  0.77 0.08      

AECO 1.46 1.45      

ICE U.S. Power Next-Day          

Prices ($ per megawatt-hour)

Hub Curre Prior      

nt Day

Day

New England 45.92 38.50      

PJM West 50.42 46.58      

Mid C 33.77 56.78      

Palo Verde 11.16  18.0      

0

SP-15 1.42 11.01      

text_section_type="notes">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 terminalFor graphics on Baker Hughes rig counts, see: For next-day SNL U.S. gas prices, see:For next-day SNL U.S. power prices, see: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:For U.S./Canada natural gas rig count vs Henry Hub futures price, see: For the U.S. natural gas speed guide, see:For the U.S. power speed guide, see:To determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined) plus (ICE Henry Hub options and futures combined divided by four) plus (NYMEX Henry Hub swaps options and futures combined divided by four) plus (NYMEX Henry Hub penultimate gas swaps divided by four)NYMEX Henry Hub options and futures combinedNYMEX Henry Hub futures onlyICE Henry Hub options and futures combinedNYMEX Henry Hub swaps options and futures combinedNYMEX Henry Hub Penultimate gas swaps

(Reporting by Scott DiSavino; Editing by Kirsten Donovan, David Evans and Paul Simao)