U.S. natgas futures tumble to lowest since 1998 on oil price collapse

March 9 (Reuters) - U.S. natural gas futures dropped to their lowest level in over 21 years on Monday after oil prices lost as much as a third of their value.

U.S. oil futures fell by as much as 34% in their biggest daily rout since the 1991 Gulf War after Saudi Arabia signaled it would hike output to win market share even though the coronavirus has already left the market oversupplied.

Even before crude futures collapsed, gas prices had already tumbled to within a nickel of their lowest level since August 1998 over the past week as record production and mild weather enabled utilities to leave more gas in storage this winter, making fuel shortages and prices spikes unlikely.

Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.7 cents, or 3.3%, to $1.651 per million British thermal units (mmBtu) at 8:55 a.m. EDT (1255 GMT).

Earlier in the session, gas slid to $1.61 per mmBtu, its lowest since August 1998. If prices drop below that level, they would fall to their lowest since September 1995. Traders noted gas prices fell despite forecasts for colder weather and higher heating demand next week than previously expected.

Refinitiv, a data provider, projected average demand in the U.S. Lower 48 states, including exports, would rise from 100.7 billion cubic feet per day (bcfd) this week to 107.5 bcfd next week. That compares with Refinitiv's forecast on Friday of 104.4 bcfd this week and 99.6 bcfd next week. The amount of gas flowing to U.S. LNG export plants, meanwhile, was on track to edge up to 7.7 bcfd on Monday from 7.5 bcfd on Sunday, according to preliminary data from Refinitiv. That compares with an average of 7.8 bcfd last week and an all-time high of 9.5 bcfd on Jan. 31. Traders noted LNG feedgas was down from the record high due mostly to a reduction in flows after fog last week kept ships from docking at Cheniere Energy Inc's Sabine Pass facility in Louisiana.

Traders are watching gas flows to U.S. LNG export plants for declines after customers canceled a couple of cargoes for April as low prices in Europe and Asia made it uneconomical for some European customers to lift cargoes. Global LNG prices are low due to warm winters in Europe and Asia and record-high storage in Europe compounded by lower demand in China related to the coronavirus. With demand from U.S. power generators and industrial firms expected to decline or steady in coming years, producers are counting on LNG exports to maintain their spectacular growth to absorb record amounts of gas associated with oil production from shale formations. U.S. LNG exports jumped 53% in 2018 and 68% in 2019, and are expected to rise 33% in 2020, according to federal energy projections.

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