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NEW YORK: US natural gas futures rose 4% to a near two-week high on Thursday on forecasts for cooler weather and higher heating demand over the next two weeks than previously expected and a slightly bigger than expected withdrawal from storage due to near record US liquefied natural gas (LNG) exports.

The US Energy Information Administration (EIA) said utilities pulled 79 billion cubic feet (bcf) of gas from storage during the week ended March 11.

That was more than the 73-bcf decrease analysts forecast in a Reuters poll and compares with a decline of 16 bcf in the same week last year and a five-year (2017-2021) average decline of 65 bcf.

Last week’s withdrawal cut stockpiles to 1.440 trillion cubic feet (tcf), or 17.4% below the five-year average of 1.744 tcf for this time of the year.

Overall, however, traders noted temperatures were mostly expected to remain at above-normal levels through late March, which should allow utilities to start injecting gas into storage next week - about a week earlier than usual.

With Russia’s invasion of Ukraine stoking global energy supply concerns, European gas was trading about seven times higher than US futures, keeping demand for US LNG exports near record highs. Russia is the world’s second-biggest gas producer after the United States.

US gas futures remain shielded from global prices because the United States has all the fuel it needs for domestic use, and the country’s ability to export more LNG is limited by capacity constraints.

The United States is already producing LNG near full capacity. So, no matter how high global gas prices rise, it will not be able to produce much more of the super cooled fuel anytime soon.

Before Russia’s Feb. 24 Ukraine invasion, the United States worked with other countries to ensure gas supplies, mostly from LNG, would keep flowing to Europe. Russia usually provides around 30% to 40% of Europe’s gas, which totalled about 18.0 billion cubic feet per day (bcfd) in 2021.

US front-month gas futures rose 18.9 cents, or 4.0%, to $4.937 per million British thermal units at 10:37 a.m. EDT (1437 GMT), putting the contract on track for its highest close since March 4.

Data provider Refinitiv said average gas output in the US Lower 48 states was on track to rise to 93.1 bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in the year. That compares with a monthly record of 96.2 bcfd in December.

With milder spring weather coming, Refinitiv projected average US gas demand, including exports, would drop from 109.6 bcfd this week to 96.0 bcfd next week. Those forecasts were higher than Refinitiv’s outlook on Wednesday.

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