US natgas futures slip to one-week low ahead of storage report

US natural gas futures slipped on Thursday to their lowest in a week on forecasts for milder weather and lower heating demand next week than previously expected.

That small decline comes ahead of a federal report expected to show last week's storage draw was smaller than usual and could be the last withdrawal of the 2020-2021 winter heating season.

Analysts forecast US utilities pulled just 25 billion cubic feet (bcf) of gas from storage during the week ended March 19. That compares with a decrease of 25 bcf in the same week last year and a five-year (2016-2020) average withdrawal of 51 bcf.

If correct, last week's decrease would cut stockpiles to 1.757 trillion cubic feet (tcf), which would be 3.7% below the five-year average of 1.824 tcf for this time of year.

Front-month gas futures fell 2.3 cents, or 0.9%, to $2.495 per million British thermal units (mmBtu) at 9:03 a.m. EDT (1303 GMT), putting the contract on track for its lowest close since March 18.

That leaves the front-month down about 25% since hitting a three-month high of $3.316 per mmBtu during the Texas freeze in mid-February.

Analysts said falling demand and rising output over the past month caused utilities to pull less gas from storage in recent weeks. Some analysts think utilities will take the unusual step of adding gas to storage during the last week of March. Over the past five years, utilities have pulled on average 24 bcf during the week ended March 26.

Data provider Refinitiv said output in the Lower 48 US states averaged 91.0 billion cubic feet per day (bcfd) so far in March, up sharply from a 28-month low of 86.5 bcfd in February, when extreme weather froze gas wells and pipes in Texas. That, however, was still much lower than the record monthly high of 95.4 bcfd in November 2019.

Refinitiv projected average gas demand, including exports, would ease from 99.5 bcfd this week to 96.8 bcfd next week as the weather turns milder.

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