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NEW YORK: US natural gas futures dropped about 11% on Thursday in what has already been an extremely volatile week on a slightly smaller-than-expected storage draw and forecasts for less cold and lower heating demand over the next two weeks than previously expected.

That price decline came even as a major winter storm hit Texas and the rest of the central United States, reminding the market of last year’s February freeze when gas pipes and power plants froze, leaving millions without power and heat for days.

In explaining the futures price drop, Robert Yawger, executive director of energy futures at Mizuho, said “There is no doubt that the situation (in Texas) is much better than last year, with people on the scene ... telling me that it is not even close.”

The weather, however, was still expected to remain colder than normal through mid February, which caused prices to rocket up almost 16% on Wednesday. That cold has already frozen gas wells and caused US output to drop to its lowest since last February.

The US Energy Information Administration (EIA) said US utilities pulled a massive 268 billion cubic feet (bcf) of gas from storage during the brutally cold week ended Jan. 28, the biggest weekly withdrawal since last year’s February freeze.

That withdrawal, however, was lower than the 277-bcf drop analysts forecast in a Reuters poll and compares with a decline of 183 bcf in the same week last year and a five-year (2017-2021) average decline of 150 bcf.

“Sustained cold is expected to drive the following two withdrawals past 200 bcf as well, and the market faces the potential of experiencing five consecutive 200+ withdrawals, a feat not ever witnessed in the history of the gas market,” analysts at Gelber and Associates said in a report, noting the loss of output to freeze-offs will likely keep market volatility high in coming weeks.

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