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UPDATE 1-U.S. natgas falls 3% with oil decline, despite higher demand forecasts

forecasts@ (Adds closing prices) March 11 (Reuters) - U.S. natural gas futures fell 3% on Wednesday with a decline in oil prices despite forecasts for a little more gas demand over the next two weeks than previously expected. That drop follows a more than 13% jump for gas futures over the past two days on expectations the oil price collapse earlier in the week would cause drillers to cut back on oil and associated gas production in shale basins like the Permian in West Texas and eastern New Mexico, allowing demand to absorb some of the gas supply glut that has built up in recent years. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.8 cents, or 3.0%, to settle at $1.878 per million British thermal units (mmBtu). Oil prices fell about 4% on Wednesday as Saudi Arabia prepares to boost oil production capacity for the first time in more than a decade and demand weakened due to the spread of the coronavirus. Despite big gains earlier this week, gas prices were still down 35% since hitting an eight-month high of $2.905 per mmBtu in early November because near-record production and mild winter weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely. Data provider Refinitiv projected average demand in the U.S. Lower 48 states, including exports, would edge up from 100.8 billion cubic feet per day (bcfd) this week to 102.3 bcfd next week. That is a little higher than Refinitiv's forecast on Tuesday of 99.8 bcfd this week and 101.8 bcfd next week. The amount of gas flowing to U.S. LNG export plants was on track to hold at 8.3 bcfd on Wednesday, the same as Tuesday, according to preliminary data from Refinitiv. That compares with an average of 7.8 bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31. 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, record-high storage in Europe and lower demand in China related to the coronavirus.

Week ended Week ended Year ago Five-yearMarch 6 Feb. 28 March 6 average(Forecast) (Actual) March 6U.S. natgas storage (bcf): -59 -109 -164

-99

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year Norm

Norm

U.S. GFS HDDs 237 244 293 280 283U.S. GFS CDDs 26 23 10 14 10U.S. GFS TDDs 263 267 370 294 293

Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-YearLast Year Average For

Month U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 93.9 93.6 93.6 88.5 76.9U.S. Imports from Canada 7.1 6.7 7.2 8.6 8.5U.S. LNG Imports 0.1 0.1 0.0 0.1 0.2Total U.S. Supply 101.2 100.4 100.8 97.2 85.6

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 3.0 3.0 3.1 2.6U.S. Exports to Mexico 5.6 5.5 5.6 4.8 3.8U.S. LNG Exports 8.1 8.0 8.6 5.1 1.8U.S. Commercial 13.2 10.7 11.0 13.4 12.3U.S. Residential 20.5 15.9 16.6 21.7 19.4U.S. Power Plant 28.7 27.6 27.5 25.1 23.7U.S. Industrial 23.8 23.1 23.1 23.4 22.6U.S. Plant Fuel 4.6 4.6 4.6 4.6 4.7U.S. Pipe Distribution 2.5 2.2 2.3 2.3 2.5U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1Total U.S. Consumption 93.4 84.3 85.2 90.6 85.3Total U.S. Demand 109.9 100.8 102.3 103.6 93.5

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior DayHenry Hub <NG-W-HH-SNL> 1.91 1.74Transco Z6 New York <NG-CG-NY-SNL> 1.56 1.42PG&E Citygate <NG-CG-PGE-SNL> 2.62 2.63Dominion South <NG-PCN-APP-SNL> 1.49 1.35Chicago Citygate <NG-CG-CH-SNL> 1.69 1.54Algonquin Citygate <NG-CG-BS-SNL> 1.65 1.56SoCal Citygate <NG-SCL-CGT-SNL> 2.25 2.09Waha Hub <NG-WAH-WTX-SNL> 0.93 0.40

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior DayNew England <EL-PK-NPMS-SNL> 19.00 17.75PJM West <EL-PK-PJMW-SNL> 23.18 19.50Ercot North <EL-PK-ERTN-SNL> 26.00 24.00Mid C <EL-PK-MIDC-SNL> 23.38 30.38Palo Verde <EL-PK-PLVD-SNL> 27.75 34.50SP-15 <EL-PK-SP15-SNL> 32.75 32.75

(Reporting by Scott DiSavino; Editing by Bernadette Baum)