UPDATE 1-US natgas prices fall 3% to 3-week low on lower demand forecast

(Adds latest prices) By Scott DiSavino March 25 (Reuters) - U.S. natural gas futures fell about 3% on Monday to a three-week low, on lowered demand forecasts for this week, ample gas in storage and expectations gas flows to liquefied natural gas (LNG) export plants will remain low. On its second to last day as the front-month, gas futures for April delivery on the New York Mercantile Exchange fell 4.4 cents, or 2.7%, to settle at $1.615 per million British thermal units (mmBtu), their lowest since close since Feb. 27. Futures for May, which will soon be the front-month, were trading down about 1% to around $1.79 per mmBtu. On Feb. 27, prices hit $1.511 per mmBtu, their lowest since June 2020, as near-record output, mostly mild weather and low winter heating demand allowed utilities to leave significantly more gas in storage than usual for this time of year. Analysts estimated current gas stockpiles were around 41% above normal levels. Low prices will boost U.S. gas use to a record high in 2024, but cut production for the first time since 2020 when the COVID-19 pandemic destroyed demand for the fuel, according to the U.S. Energy Information Administration's latest outlook. Output was already down by around 4% over the past month as several energy firms, including EQT and Chesapeake Energy , delayed well completions and cut back on other drilling activities. In the spot market low demand and pipeline maintenance trapped gas in the Permian basin, the nation's biggest oil producing shale formation, causing next-day prices at the Waha hub in West Texas to drop below zero for a second time this month. Negative prices mean there is too much gas in a region due to low demand and/or pipeline constraints. Producers can either reduce output or pay to keep pulling fuel out of the ground. It is not unusual to see negative Waha prices during times of low demand because producers there are seeking oil, which is much more valuable than gas, so they can keep making money by pumping more oil even when gas prices are negative. SUPPLY AND DEMAND Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 100.3 billion cubic feet per day (bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record high of 105.5 bcfd in December 2023. Meteorologists projected weather across the Lower 48 would remain mostly colder than normal through April 9. But with seasonally warmer weather coming, LSEG forecast gas demand in the Lower 48, including exports, would fall from 113.6 bcfd this week to 109.0 bcfd next week. The forecast for this week was lower than LSEG's outlook on Friday, while its forecast for next week was higher. Gas flows to the seven big U.S. LNG export plants fell to an average of 13.2 bcfd so far in March, down from 13.7 bcfd in February. That compares with a monthly record of 14.7 bcfd in December. Analysts do not expect U.S. LNG feedgas to return to record levels until all three liquefaction trains at Freeport LNG's export plant in Texas return to service. Freeport has said it expects Trains 1 and 2 to remain shut until May for inspections and repairs, while Train 3 was operating. Each Freeport train can turn about 0.7 bcfd of gas into LNG. Week ended Week ended Year ago Five-year Mar 22 Mar 15 Mar 15 average Forecast Actual Mar 15 U.S. weekly natgas storage change (bcf): -33 +7 -55 -27 U.S. total natgas in storage (bcf): 2,299 2,332 1,866 1,627 U.S. total storage versus 5-year average 41.3% 41.0% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2023 (2018-2022) Henry Hub 1.60 1.66 2.41 2.66 3.60 Title Transfer Facility (TTF) 9.14 8.60 13.72 13.04 14.39 Japan Korea Marker (JKM) 9.45 9.29 13.59 14.39 14.31 LSEG 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 229 235 229 219 215 U.S. GFS CDDs 15 11 29 24 21 U.S. GFS TDDs 244 246 258 243 236 LSEG U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Next Week This Week Five-Year Week Last Year (2019-2023) Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 100.2 100.1 99.9 102.3 95.1 U.S. Imports from Canada 7.5 7.6 7.9 7.8 8.4 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 107.7 107.7 107.8 110.1 103.6 U.S. Demand (bcfd) U.S. Exports to Canada 3.7 3.5 3.5 2.8 3.0 U.S. Exports to Mexico 6.0 6.1 6.2 5.6 5.4 U.S. LNG Exports 13.0 13.2 13.3 13.1 9.2 U.S. Commercial 11.5 11.6 10.2 11.5 12.3 U.S. Residential 16.9 17.4 14.9 17.7 19.4 U.S. Power Plant 30.5 30.0 29.9 29.8 23.8 U.S. Industrial 24.4 24.3 23.7 23.8 26.8 U.S. Plant Fuel 4.9 4.9 4.9 4.9 5.0 U.S. Pipe Distribution 2.4 2.4 2.3 2.4 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 90.8 90.8 86.0 90.2 89.7 Total U.S. Demand 113.5 113.6 109.0 111.7 107.3 U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam Current Day Prior Day 2023 2022 2021 % of Normal % of Normal % of Normal % of Normal % of Normal Forecast Forecast Actual Actual Actual Apr-Sep 79 84 83 107 81 Jan-Jul 81 85 77 102 79 Oct-Sep 81 85 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Mar 29 Mar 22 Mar 15 Mar 8 Mar 1 Wind 13 13 15 15 14 Solar 5 5 5 4 4 Hydro 8 8 8 7 7 Other 1 1 1 1 1 Petroleum 0 0 0 0 0 Natural Gas 39 40 38 39 38 Coal 14 13 12 13 16 Nuclear 20 20 21 21 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.50 1.55 Transco Z6 New York 1.48 1.46 PG&E Citygate 2.13 2.27 Eastern Gas (old Dominion South) 1.34 1.40 Chicago Citygate 1.40 1.47 Algonquin Citygate 1.64 1.80 SoCal Citygate 1.48 1.39 Waha Hub -0.05 0.90 AECO 1.21 1.24 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 30.75 28.50 PJM West 26.00 32.00 Ercot North 14.75 25.00 Mid C 24.67 23.00 Palo Verde 11.75 14.50 SP-15 8.50 13.00 (Reporting by Scott DiSavino; Editing by Kirsten Donovan and David Gregorio)