U.S. natgas futures ease with oil price slide, lower demand next week

 (Reuters) - U.S. natural gas futures eased on Friday with a 3% decline in oil prices and on forecasts for milder weather and less heating demand next week than previously expected despite an outlook calling for cooler weather and more heating demand in two weeks.

On its last day as the front-month, gas futures for April delivery on the New York Mercantile Exchange fell 2.4 cents, or 1.5%, to $1.613 per million British thermal units at 8:53 a.m. EDT (1253 GMT). On Monday, the contract closed at $1.602, its lowest since September 1995. May futures, which will soon be the front-month, were down about 1.8% at $1.66 per mmBtu.

For the week, the front-month was up about 1% after falling about 14% last week. Looking ahead, prices later in 2020 and 2021 were mostly trading higher on expectations demand will start to rise again with the return of economic growth as governments loosen travel restrictions after the coronavirus spread slows.

The premium of futures for November over October <NGV20-X20> rose to its highest since August 2010, while calendar 2021 swung to a premium over calendar 2025 for the first time in at least a year. Even before the coronavirus started to cut global economic growth and demand for energy, gas was already trading near its 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.

With the weather expected to warm next week before cooling again in early April, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would slide from an average of 105.1 billion cubic feet per day (bcfd) this week to 98.2 bcfd next week before rising to 101.9 bcfd in two weeks. That is lower than Refinitiv's forecast on Thursday of 105.3 bcfd this week and 99.5 bcfd next week. The amount of gas flowing to U.S. LNG export plants eased to 9.0 bcfd on Thursday from 9.1 bcfd on Wednesday, according to Refinitiv. That compares with an average of 8.1 bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31.

Gas production in the Lower 48 states edged up to 93.3 bcfd on Thursday from 93.0 bcfd on Wednesday, according to Refinitiv. That compares with an average of 94.1 bcfd last week and an all-time daily high of 96.6 bcfd on Nov. 30. As the weather turns more mild with the coming of spring, next-day power fell to its lowest on record at the SP-15 hub <EL-PK-SP15-SNL> in Southern California and its lowest since July 2015 in New England <EL-PK-NPMS-SNL>, while gas dropped to its lowest since December 1998 in Chicago <NG-CG-CH-SNL>.

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