US natural gas futures fell almost 2% to a fresh three-week low on Friday on forecasts for milder weather and lower heating demand through early February despite a bigger than expected storage draw last week on near record liquefied natural gas (LNG) exports.
The US Energy Information Administration (EIA) said US utilities pulled 187 billion cubic feet (bcf) of gas from storage in the week ended Jan. 15.
That was bigger than the 174-bcf decline analysts forecast in a Reuters poll and compares with a decrease of 97 bcf in the same week last year and a five-year (2016-2020) average withdrawal of 167 bcf.
Front-month gas futures fell 4.7 cents, or 1.9%, to $2.444 per million British thermal units at 10:36 a.m. EDT (1536 GMT), putting the contract on track for its lowest close since Dec. 30 for a second day in a row.
For the week, the contract was down about 11% after rising about 1% last week. That would be its biggest weekly percentage decline since November.
Even though the weather will remain milder than normal through early February, next week is still expected to be colder than this week. Data provider Refinitiv projected average gas demand, including exports, will rise to 124.3 bcfd next week from 119.6 billion cubic feet per day (bcfd) this week before dropping to 119.2 bcfd in two weeks when the weather turns milder again. That forecast for next week, however, was lower than Refinitiv's 125.6-bcfd outlook on Thursday.
The amount of gas flowing to US LNG export plants has averaged 10.4 bcfd in January. Traders said that was down from December's 10.7 bcfd monthly record because flows to Cheniere Energy Inc's Sabine Pass plant in Louisiana and Freeport LNG's plant in Texas were lower this week due to a combination of fog and pipeline maintenance.