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U.S. natgas futures edge up from 24-year low ahead of weekly storage report

U.S. natural gas futures edged up on Thursday from a 24-year low in the prior
session despite forecasts for demand to fall as flows to liquefied natural gas export terminals decline
and ahead of a federal report expected to show a very small storage draw last week.
    Traders noted the market was taking a break with prices for both oil and gas trading within the highs
and lows hit during Wednesday's meltdown. Although its early in the session, technical traders call this
an "inside day," which could indicate the market is unsure of whether prices will rise or fall so they
temporarily consolidate around a new - in this case much lower - trading range.
    Analysts said utilities likely pulled just 6 billion cubic feet (bcf) of gas from storage during the
week ended March 13. That compares with a decline of 91 bcf during the same week last year and a
five-year (2015-19) average reduction of 63 bcf for the period.
    If correct, the decrease for the week ended March 13 would bring stockpiles to 2.037 trillion cubic
feet (tcf), 16.2% above the five-year average of 1.753 tcf for this time of year.
    The U.S. Energy Information Administration will release its weekly storage report at 10:30 a.m. EDT
(1430 GMT) on Thursday.
    After falling to its lowest since September 1995 on Wednesday, front-month gas futures for
April delivery on the New York Mercantile Exchange rose 2.1 cents, or 1.3%, to $1.625 per million British
thermal units at 9:32 a.m. EDT (1332 GMT).
    Oil prices, meanwhile, bounced nearly 7% on Thursday after a three-day selloff drove them to their
lowest in almost two decades.
    Even before the coronavirus started to spread, gas prices were already trading near their lowest in
years as record production and months of mild weather enabled utilities to leave more gas in storage,
making fuel shortages and price spikes unlikely this winter.
    Now with the coming of milder spring-like weather, data provider Refinitiv projected gas demand in
the U.S. Lower 48 states, including exports, would slide from an average of 104.2 billion cubic feet per
day (bcfd) this week to 103.0 bcfd next week. That is a big change from Wednesday's outlook when
Refiinitiv forecast demand would rise from 104.4 bcfd this week to 105.3 bcfd next week.
    Most of that demand decline comes from lower LNG exports. The amount of gas expected to flow to LNG
export plants was on track to rise to 7.1 bcfd on Thursday from a near five-month low of 6.5 bcfd on
Wednesday, according to early estimates from Refinitiv. On Wednesday, the data was pointing to flows of
8.3 bcfd to the LNG plants on Wednesday. 
    All of that decline was at Cheniere Energy Inc's Sabine Pass plant in Louisiana, which took
in just 1.8 bcfd on Wednesday, its lowest since April 2019.
    With the weather turning milder, next-day gas prices at the U.S. Henry Hub benchmark NG-W-HH-SNL in
Louisiana fell their lowest since April 2016, while prices in Chicago plunged to their lowest since
December 1998.

 (Reporting by Scott DiSavino; Editing by David Gregorio)

 


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