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NEW YORK: US natural gas futures fell on Friday, en route to a weekly decline, as warmer-than-normal weather slowed heating demand for the fuel while inventories stayed high.

Front-month gas futures for April delivery on the New York Mercantile Exchange settled 1.3 cents lower at $1.805 per million British thermal units (mmBtu).

During the session, prices touched their lowest in more than a week. They were down about 1.5% for the week. “The market’s outlook is bearish in the near-term, with mild weather that has been in the background for a few months and withdrawals dropping below the seasonal levels,” said Thomas Saal, senior vice president for energy at StoneX Financial.

“The market’s focus will be on storage injections and summer. If we get a warm spring, then it will be friendly for the market, which could drive prices above the $2 mark.”

The US Energy Information Administration (EIA) on Thursday said utilities pulled 40 billion cubic feet (bcf) of gas out of storage during the week ended March 1. That was in line with the 40-bcf withdrawal that analysts forecast in a Reuters poll and compares with a decrease of 72 bcf in the same week last year and a five-year (2019-2023) average decline of 93 bcf for this time of year.

Friday’s price declines came despite a drop in output over the past month after gas prices collapsed to a 3-1/2-year low in February.

Financial firm LSEG said gas output in the Lower 48 fell to an average of 100.2 billion cubic feet per day (bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record of 105.5 bcfd in December 2023.

The market retreated some this week, suggesting serious doubt about whether the curtailment would be enough to offset the demand softness, said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City.

“In my opinion, more cut will be needed to stop prices from sliding further as there is just not enough demand, unless we see some signs of early and hot summer.”

Traders noted the output drop showed that several energy firms, including Chesapeake Energy, soon to become the biggest US gas producer after its merger with Southwestern Energy, were following through on plans to cut gas drilling this year.

On Monday, EQT, currently the biggest US gas producer, said that it would curtail nearly 1 bcfd of production through March.

Earlier this week, BofA Research lowered its 2024 US Henry Hub forecast to $2.40 and highlighted that production is responding to weak prices, and prices must stay low in first half of this year to keep supply depressed and curb inventory builds.

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