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U.S. natgas futures fall 3% with oil despite forecasts for more heating demand

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March 16 (Reuters) - U.S. natural gas futures fell about 3% on Monday along with a 10% drop in oil prices on worries that global crude demand will decline as the coronavirus slows economic growth. That move lower in gas prices came despite forecasts for cooler weather and more heating demand in the United States over the next two weeks than previously expected. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 5.4 cents, or 2.9%, to $1.815 per million British thermal units (mmBtu) at 11:29 a.m. EDT (1529 GMT). Speculators cut their net short positions on the NYMEX and Intercontinental Exchange last week by the most since November to their lowest since November after sharp price declines in oil and gas due to coronavirus concerns caused hedge funds to exit short positions faster than long positions. Overall, speculators exited both short and long positions, causing speculative open interest in NYMEX futures and options to drop to its lowest since early January. Even before the coronavirus started to spread, gas prices were already near their lowest in four years because near-record production and mild weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes this winter unlikely. Gas futures were trading about 38% below an eight-month high of $2.905 per mmBtu hit in early November. Brent fell by 10% on Monday, and U.S. crude dropped below $30, as emergency rate cuts by the U.S. Federal Reserve and its global counterparts failed to tame markets and China's factory output plunged at the sharpest pace in 30 years amid the spread of coronavirus. Data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would jump from an average of 103.2 billion cubic feet per day (bcfd) this week to 108.7 bcfd next week. That is much higher than Refinitiv's forecasts on Friday of 104.3 bcfd this week and 103.8 bcfd next week. The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants was on track to fall to 7.7 bcfd on Monday from 8.4 bcfd on Sunday due mostly to declines at Cheniere Energy Inc's Sabine Pass export terminal in Louisiana, according to data from Refinitiv. That compares with an average of 8.0 bcfd last week and a daily all-time high of 9.5 bcfd on Jan. 31. Gas production in the Lower 48 states held at 94.5 bcfd on Monday, the same as Sunday. That compares with an average of 93.9 bcfd last week and an all-time daily high of 96.6 bcfd on Nov. 30. Analysts said they expect gas production to decline over the next year as energy firms slash spending on new oil drilling due to the collapse in crude prices since much of the growth in gas output in recent years has come from gas associated with oil production in shale basins like the Permian in West Texas.

Week ended Week ended Year ago Five-yearMarch 13 March 6 March 13 average(Forecast) (Actual) March 13U.S. natgas storage (bcf): -12 -48 -91

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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 278 252 263 250 262U.S. GFS CDDs 21 26 7 17 12U.S. GFS TDDs 299 278 370 267 274

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 93.7 94.2 94.2 88.9 76.9U.S. Imports from Canada 6.6 6.9 7.1 8.6 8.5U.S. LNG Imports 0.1 0.1 0.0 0.0 0.2Total U.S. Supply 100.5 101.1 101.2 97.5 85.6

U.S. Demand (bcfd)

U.S. Exports to Canada 3.0 2.8 2.9 2.8 2.6U.S. Exports to Mexico 5.6 5.6 5.6 4.8 3.8U.S. LNG Exports 8.0 7.8 8.0 5.4 1.8U.S. Commercial 10.9 11.1 12.6 12.4 12.3U.S. Residential 16.2 16.6 19.8 19.2 19.4U.S. Power Plant 27.9 29.0 28.5 26.1 23.7U.S. Industrial 23.1 23.2 24.0 23.6 22.6U.S. Plant Fuel 4.6 4.7 4.7 4.7 4.7U.S. Pipe Distribution 2.3 2.3 2.5 2.3 2.5U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1Total U.S. Consumption 85.0 87.0 92.2 88.4 85.3Total U.S. Demand 101.6 103.2 108.7 101.4 93.5

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

Hub Current Day Prior DayHenry Hub <NG-W-HH-SNL> 1.94 1.83Transco Z6 New York <NG-CG-NY-SNL> 1.67 1.50PG&E Citygate <NG-CG-PGE-SNL> 2.75 2.75Dominion South <NG-PCN-APP-SNL> 1.54 1.45Chicago Citygate <NG-CG-CH-SNL> 1.74 1.66Algonquin Citygate <NG-CG-BS-SNL> 1.78 1.67SoCal Citygate <NG-SCL-CGT-SNL> 2.35 2.35Waha Hub <NG-WAH-WTX-SNL> 0.56 0.82

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

Hub Current Day Prior DayNew England <EL-PK-NPMS-SNL> 17.75 20.25PJM West <EL-PK-PJMW-SNL> 25.78 22.25Ercot North <EL-PK-ERTN-SNL> 35.00 20.75Mid C <EL-PK-MIDC-SNL> 38.50 23.50Palo Verde <EL-PK-PLVD-SNL> 39.00 29.50SP-15 <EL-PK-SP15-SNL> 39.75 30.50

(Reporting by Scott DiSavino; Editing by David Gregorio)

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