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UPDATE 2-U.S. natgas futures slip with oil decline and small storage draw

(Adds closing prices) March 12 (Reuters) - U.S. natural gas futures fell 2% on Thursday with a 5% drop in oil prices and a smaller-than-expected storage draw last week. Traders noted the gas decline was limited by forecasts for cooler U.S. weather and higher heating demand over the next two weeks than earlier expected and expectations the oil price drop this week would cut crude and associated gas production in shale basins, allowing gas demand to absorb some of the supply glut that has built up in recent years. The U.S. Energy Information Administration (EIA) said utilities pulled 48 billion cubic feet (bcf) of gas from storage during the week ended March 6. That was lower than the 59-bcf decline analysts expected in a Reuters poll and compares with a drop of 164 bcf during the same week last year and a five-year (2015-19) average reduction of 99 bcf for the period. The decrease for the week ended March 6 cut stockpiles to 2.043 trillion cubic feet (tcf), 12.5% above the five-year average of 1.816 tcf for this time of year. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 3.7 cents, or 2.0%, to settle at $1.841 per million British thermal units (mmBtu). U.S. oil prices fell about 5% on Thursday after U.S. President Donald Trump restricted travel from continental Europe, among measures to halt the spread of the coronavirus after the World Health Organization described the outbreak as a pandemic. Over the past few months, gas prices have fallen 37% 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 gas demand in the U.S. Lower 48 states, including exports, would edge up from 101.4 billion cubic feet per day (bcfd) this week to 104.5 bcfd next week. That is higher than Refinitiv's forecast on Wednesday of 100.8 bcfd this week and 102.3 bcfd next week. The amount of gas flowing to U.S. LNG export plants was on track to rise to 8.4 bcfd on Thursday from 8.3 bcfd on Wednesday, 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. U.S. production, meanwhile, edged up to 93.7 bcfd on Wednesday from 93.6 bcfd on Tuesday, according to Refinitiv. That compares with an average of 93.7 bcfd last week and an all-time daily high of 96.6 bcfd on Nov. 30.

Week ended Week ended Year ago Five-yearMarch 6 Feb. 28 March 6 average(Actual) (Actual) March 6U.S. natgas storage (bcf): -48 -109 -164

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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 234 237 293 280 278U.S. GFS CDDs 28 26 10 14 11U.S. GFS TDDs 262 263 370 294 289

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 93.7 93.7 88.5 76.9U.S. Imports from Canada 7.1 6.6 7.3 8.6 8.5U.S. LNG Imports 0.1 0.1 0.0 0.1 0.2Total U.S. Supply 101.2 100.4 100.9 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 5.6 5.6 4.8 3.8U.S. LNG Exports 8.1 8.0 8.6 5.1 1.8U.S. Commercial 13.2 10.8 11.5 13.4 12.3U.S. Residential 20.5 16.0 17.4 21.7 19.4U.S. Power Plant 28.7 27.8 27.7 25.1 23.7U.S. Industrial 23.8 23.1 23.3 23.4 22.6U.S. Plant Fuel 4.6 4.6 4.6 4.6 4.7U.S. Pipe Distribution 2.5 2.3 2.3 2.3 2.5U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1Total U.S. Consumption 93.4 84.8 87.0 90.6 85.3Total U.S. Demand 109.9 101.4 104.3 103.6 93.5

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

Hub Current Day Prior DayHenry Hub <NG-W-HH-SNL> 1.96 1.91Transco Z6 New York <NG-CG-NY-SNL> 1.70 1.56PG&E Citygate <NG-CG-PGE-SNL> 2.84 2.62Dominion South <NG-PCN-APP-SNL> 1.52 1.49Chicago Citygate <NG-CG-CH-SNL> 1.77 1.69Algonquin Citygate <NG-CG-BS-SNL> 1.74 1.65SoCal Citygate <NG-SCL-CGT-SNL> 2.40 2.25Waha Hub <NG-WAH-WTX-SNL> 1.15 0.93

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

Hub Current Day Prior DayNew England <EL-PK-NPMS-SNL> 21.25 19.00PJM West <EL-PK-PJMW-SNL> 23.00 23.18Ercot North <EL-PK-ERTN-SNL> 29.50 26.00Mid C <EL-PK-MIDC-SNL> 23.75 23.38Palo Verde <EL-PK-PLVD-SNL> 27.75 27.75SP-15 <EL-PK-SP15-SNL> 30.75 32.75

(Reporting by Scott DiSavino; Editing by Bernadette Baum, Alistair Bell and Jonathan Oatis)