US natural gas prices climb 2% to one-week high on record LNG flows, daily output drop

• US gas output on track to hit monthly record in March
• US LNG export feedgas set to hit monthly record in March

March 19 (Reuters) - U.S. natural gas futures climbed about 2% to a one-week high on Wednesday on record gas flows to liquefied natural gas (LNG) export plants and another drop in daily output.

Front-month gas futures NGc1 for April delivery on the New York Mercantile Exchange were up 8.5 cents, or 2.1%, to $4.137 per million British thermal units (mmBtu) at 8:52 a.m. EDT (1252 GMT), putting the contract on track for its highest close since March 11.

The price increase occurred despite forecasts for less demand over the next two weeks than previously expected, with the weather expected to remain seasonally mild through early April.

That decline in demand should reduce the amount of gas utilities need to pull from storage in coming weeks.

Gas stockpiles, however, were still around 12% below normal levels for this time of year after extreme cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January. [EIA /GAS] NGAS/POLL

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 105.8 billion cubic feet per day (bcfd) so far in March, up from a record 105.1 bcfd in February.

On a daily basis, output over the past two days was on track to drop by around 2.8 bcfd to a preliminary three-week low of 103.9 bcfd on Wednesday.

Traders said the daily drop was likely related to spring pipeline maintenance in Texas and other states, which also caused spot prices at the Waha Hub NG-WAH-WTX-SNL in West Texas to turn negative in recent days. The traders noted that preliminary output data is often updated later in the day.

Meteorologists projected weather in the Lower 48 states would remain mostly near normal through April 3.

LSEG forecast average gas demand in the Lower 48, including exports, will rise from 106.7 bcfd this week to 109.8 bcfd next week. Those forecasts were lower than LSEG's outlook on Monday.

The amount of gas flowing to the eight big U.S. LNG export plants has risen to an average of 15.7 bcfd so far in March, up from a record 15.6 bcfd in February, as new units at Venture Global's VG.N 3.2-bcfd Plaquemines LNG export plant under construction in Louisiana enter service.

The U.S. became the world's biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due partly to supply disruptions and sanctions linked to Russia's 2022 invasion of Ukraine.

Gas was trading at a four-day high of around $14 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe, but at a three-month low of $13 at the Japan Korea Marker (JKM) JKMc1 benchmark in Asia. NG/EU