US natural gas futures ease on less cold late February forecasts

US natural gas futures slipped about 1% to their lowest in a week on Wednesday on forecasts for a slightly lower peak daily demand next week and less cold weather in late February.

That price decline came even though next week's daily peak was still expected to set a new record high and despite forecasts calling for slightly colder weather and higher heating demand this week and next.

Front-month gas futures fell 4.8 cents, or 1.7%, to $2.787 per million British thermal units at 7:49 a.m. EST (1249 GMT), putting the contract on track for its lowest close since Feb. 3.

In the spot market, the arctic freeze moving across the country this week boosted next-day gas at the Waha hub in the Permian shale in Texas rose to its highest since December 2018.

Data provider Refinitiv said output in the Lower 48 US states has averaged 90.2 billion cubic feet per day (bcfd) so far in February. Traders noted that was down from 91.0 bcfd in January, due in part to the freezing of some wells. Output hit an all-time monthly high of 95.4 bcfd in November 2019. On a daily basis, output was on track to drop from 89.6 bcfd on Tuesday to 88.6 bcfd on Wednesday, the lowest since mid-November, according to preliminary data from Refinitiv that will likely be revised later in the day.

Traders said wellhead freeze-offs in all producing regions were likely the cause of that decline, including losses of around 0.5 bcfd along the Gulf Coast, 0.1 bcfd in Appalachia, 0.6 bcfd in the Midcontinent, 0.2 bcfd in the Rockies and 0.1 bcfd in North Dakota.

With much colder weather on the horizon, Refinitiv projected average gas demand, including exports, would jump from 134.0 bcfd this week to 148.7 bcfd next week. Those forecasts were higher than Refinitiv's outlook on Tuesday.

On a daily basis, total demand was expected to reach 151.2 bcfd on Feb. 14, 156.5 bcfd on Feb. 15 and 152.7 bcfd on Feb 16, all of which would top the current daily record high of 150.6 bcfd on Jan. 30, 2019, according to Refinitiv. The peak, however, was down from Refinitiv's outlook on Tuesday calling for a high of 159.0 bcfd on Feb. 15.

The amount of gas flowing to US liquefied natural gas (LNG) export plants has averaged 10.6 bcfd so far in February, up from January's 10.4 bcfd average but just shy of December's 10.7 bcfd record high. Traders noted LNG exports dipped this week due to fog around Sabine Pass in Louisiana.