US natgas futures eased to fresh 5-week low on milder weather

US natural gas futures eased to a fresh five-week low on Tuesday on forecasts for milder weather over the next two weeks than earlier expected.

Front-month gas futures fell 1.4 cents, or 0.5%, to $2.650 per million British thermal units at 7:32 a.m. EST (1232 GMT), putting the contract on track for its lowest close since Jan. 29 for a fourth day in a row.

Data provider Refinitiv said output in the Lower 48 US states averaged 90.9 billion cubic feet per day (bcfd) so far in March. That compares with a 28-month low of 86.5 bcfd in February when extreme weather froze gas wells and pipes in Texas and an all-time monthly high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would fall from 104.2 bcfd this week to 102.8 bcfd next week as the weather turns milder. Those demand forecasts were lower than Refinitiv projected on Monday.

The amount of gas flowing to US LNG export plants, meanwhile, averaged 10.2 bcfd so far in March. That compares with a four-month low of 8.5 bcfd in February as extreme cold cut power and gas supplies to the facilities, and a monthly record high of 10.7 bcfd in December.

Buyers around the world continue to purchase near record amounts of US gas because prices in Europe and Asia remain high enough to cover the cost of transporting the US fuel across the ocean.

Traders, however, noted US LNG exports cannot rise much more until new units enter service in 2022, since the United States only has the capacity to export about 10.5 bcfd of gas as LNG. LNG plants can pull in a little more gas than they can export since they use some of the fuel to run the facility.