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NEW YORK: US natural gas futures slipped over 1% on Thursday on a smaller-than-expected weekly storage draw and forecasts for slightly lower demand over the next two weeks.

That decline came despite a much colder weather outlook for mid-February.

The US Energy Information Administration (EIA) said utilities pulled just 128 billion cubic feet (bcf) of gas from storage in the week ended Jan. 22 when the weather was mild and heating demand low.

That was below the 136-bcf decline analysts forecast in a Reuters poll and compares with a decrease of 170 bcf in the same week last year and a five-year (2016-2020) average withdrawal of 174 bcf. Last week’s decrease cut stockpiles to 2.881 trillion cubic feet (tcf), which was still 9.3% above the five-year average of 2.637 tcf for this time of year.

On its first day as the front-month, gas futures for March delivery fell 3.8 cents, or 1.4%, from where that contract closed on Wednesday to settle at $2.664 per million British thermal units.

That, however, was down over 3% from where the February contract settled on Wednesday, which was the highest close for the front-month since Dec. 22.

In the spot market, meanwhile, cold weather boosted next-day gas prices at the Dominion South hub in southwest Pennsylvania to their highest since April 2019 and gas and power prices in New York and New England to their highest since December.

Even though the weather outlook was colder than previously forecast, temperatures next week were still expected to be higher than this week.

Data provider Refinitiv projected that milder weather would cause average gas demand, including exports, to slip from 129.3 billion cubic feet per day (bcfd) this week to 126.4 bcfd next week. Those demand forecasts were lower than Refinitiv’s outlook on Wednesday.