UPDATE 1-US natgas prices fall 3% to 2-week low on weaker demand forecast

(Adds latest prices) By Scott DiSavino March 12 (Reuters) - U.S. natural gas futures fell about 3% to a two-week low on Tuesday on forecasts for less demand this week than previously expected. Also weighing on prices in recent weeks has been the reduced amount of gas flowing to liquefied natural gas (LNG) export plants due to ongoing outages at Freeport LNG 's plant in Texas. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 4.5 cents, or 2.6%, to settle at $1.714 per million British thermal units (mmBtu), their lowest close since Feb. 27 for a fourth day in a row. In total, the contract has lost about 13% over the past five days. Those price declines came despite a roughly 6% drop in U.S. output over the past month after gas prices collapsed to a 3-1/2-year low in February. Low prices will boost U.S. gas use to a record high in 2024, but cause gas production to decline for the first year since 2020 when the pandemic destroyed demand for the fuel, according to the U.S. Energy Information Administration 's (EIA) latest outlook. Prices fell as low as $1.511 per mmBtu on Feb. 27, their lowest since June 2020, as near-record output, mostly mild weather and low heating demand this winter allowed utilities to leave significantly more gas in storage than usual for this time of year. Analysts estimated current gas stockpiles were around 38% above normal levels. In other news, U.S. energy company CNX Resources said it will delay well completion activities and produce less of the fuel this year. By cutting output in response to low gas prices, CNX joins several other U.S. energy firms, including EQT and Chesapeake Energy in reducing drilling activities. EQT is currently the biggest U.S. gas producer and Chesapeake will soon become the biggest producer after its merger with Southwestern Energy. SUPPLY AND DEMAND Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 100.4 billion cubic feet per day (bcfd) so far in March, down from 104.1 bcfd in February. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, output was on track to drop by around 6.1 bcfd over the last month to a preliminary seven-week low of 99.3 bcfd. That would be the lowest daily production since early February 2023, excluding the massive 17.3-bcfd drop in mid-January due to freezing wells. Meteorologists projected weather across the Lower 48 states would remain warmer than normal through March 18 before turning to near- to colder-than-normal levels from March 19-27. With cooler weather coming, LSEG forecast gas demand in the Lower 48 states, including exports, would rise from 110.3 bcfd this week to 113.2 bcfd next week. The forecast for this week was lower than LSEG's outlook on Monday. Gas flows to the seven big U.S. LNG export plants slid to an average of 13.4 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 return to full service. Traders said Freeport Train 1 was operating, Train 2 could remain shut for another week or more, and Train 3 could exit an outage later this week. Week ended Week ended Year ago Five-year Mar 8 Mar 1 Mar 8 average Forecast Actual Mar 8 U.S. weekly natgas storage change (bcf): +3 -40 -65 -87 U.S. total natgas in storage (bcf): 2,337 2,334 1,989 1,696 U.S. total storage versus 5-year average 37.8% 30.9% 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 1.79 1.76 2.41 2.66 3.60 Title Transfer Facility (TTF) 7.93 7.94 13.72 13.04 14.39 Japan Korea Marker (JKM) 8.47 8.46 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 236 236 317 274 269 U.S. GFS CDDs 12 13 13 16 14 U.S. GFS TDDs 248 249 330 290 283 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 100.3 100.6 101.0 101.7 95.1 U.S. Imports from Canada 7.3 7.7 8.3 8.6 8.4 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 107.6 108.4 109.2 110.3 103.6 U.S. Demand (bcfd) U.S. Exports to Canada 3.7 3.7 3.7 2.7 3.0 U.S. Exports to Mexico 6.5 6.3 6.3 5.2 5.4 U.S. LNG Exports 13.4 13.2 13.2 13.2 9.2 U.S. Commercial 10.5 10.6 11.1 14.3 12.3 U.S. Residential 15.8 15.6 16.4 22.8 19.4 U.S. Power Plant 30.6 29.8 30.7 30.4 23.8 U.S. Industrial 23.5 23.7 24.2 24.1 26.8 U.S. Plant Fuel 5.0 5.0 5.0 4.9 5.0 U.S. Pipe Distribution 2.3 2.3 2.4 2.3 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 87.8 87.0 89.9 98.9 89.7 Total U.S. Demand 111.5 110.3 113.2 120.0 107.3 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 81 80 83 107 81 Jan-Jul 81 80 77 102 79 Oct-Sep 83 82 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Mar 15 Mar 8 Mar 1 Feb 23 Feb 16 Wind 13 15 16 13 11 Solar 5 4 4 4 4 Hydro 7 7 7 7 7 Other 1 1 1 1 1 Petroleum 0 0 0 0 0 Natural Gas 40 39 38 40 41 Coal 13 13 16 15 16 Nuclear 21 21 21 20 21 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.54 1.54 Transco Z6 New York 1.35 1.48 PG&E Citygate 2.54 2.62 Eastern Gas (old Dominion South) 1.27 1.44 Chicago Citygate 1.38 1.48 Algonquin Citygate 1.47 1.70 SoCal Citygate 1.98 2.05 Waha Hub 0.66 0.65 AECO 1.20 1.22 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 23.50 26.00 PJM West 22.50 21.75 Ercot North 14.25 24.50 Mid C 27.50 36.98 Palo Verde 17.00 5.25 SP-15 11.50 5.50 (Reporting by Scott DiSavino Editing by Ros Russell and Marguerita Choy)