UPDATE 1-US natgas prices slide 2% on lower demand forecasts, extended Freeport LNG outage

(Adds latest prices) By Scott DiSavino March 20 (Reuters) - U.S. natural gas futures slid about 3% on Wednesday on forecasts for less demand over the next two weeks than previously expected and news of a demand-destroying, extended outage of two liquefaction trains at Freeport LNG's export plant in Texas. Freeport LNG said it anticipates two of the three liquefaction trains at its liquefied natural gas (LNG) plant will remain out of service for testing and repairs through May. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 4.5 cents, or 2.6%, to settle at $1.699 per million British thermal units (mmBtu). On Tuesday, the contract closed at its highest since March 11. Energy traders said futures were supported earlier in the week by a continued drop in U.S. output after gas prices collapsed to a 3-1/2-year low in February. 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 41% above normal levels. Those low prices were expected to boost U.S. gas use to a record high in 2024, but will 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 5% over the past month as several energy firms, including EQT and Chesapeake Energy , delay well completions and cut back on other 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 had fallen 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 states would remain mostly colder than normal through March 24 before turning to near normal from March 25-April 4. LSEG forecast gas demand in the lower 48 states, including exports, would remain around 114.0 bcfd this week and next. Those forecasts were lower than LSEG's outlook on Tuesday. Gas flows to the seven big U.S. LNG export plants have fallen to an average of 13.3 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 return to full service. Freeport said Train 1 will be taken down immediately, Train 2 is offline and Train 3 is operating. Train 3 shut in January during a brutal freeze that damaged one of its motors. LSEG said the amount of gas flowing to Freeport was on track to rise to 0.9 bcfd on Wednesday from 0.3 bcfd on Tuesday. Each liquefaction train at Freeport can turn about 0.7 bcfd of gas into LNG. Week ended Week ended Year ago Five-year Mar 15 Mar 8 Mar 15 average Forecast Actual Mar 15 U.S. weekly natgas storage change (bcf): +4 -9 -68 -42 U.S. total natgas in storage (bcf): 2,329 2,325 1,921 1,654 U.S. total storage versus 5-year average 40.8% 37.1% 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 1.73 1.74 2.41 2.66 3.60 Title Transfer Facility (TTF) 9.04 9.28 13.72 13.04 14.39 Japan Korea Marker (JKM) 9.90 8.88 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 255 260 280 246 236 U.S. GFS CDDs 10 10 19 21 18 U.S. GFS TDDs 265 270 299 267 254 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 100.4 100.0 100.0 101.9 95.1 U.S. Imports from Canada 7.6 7.4 8.0 8.6 8.4 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 108.0 107.5 107.9 110.5 103.6 U.S. Demand (bcfd) U.S. Exports to Canada 3.7 3.7 3.7 2.8 3.0 U.S. Exports to Mexico 6.5 5.6 6.2 5.2 5.4 U.S. LNG Exports 13.2 13.1 13.4 13.0 9.2 U.S. Commercial 10.4 11.5 11.5 13.1 12.3 U.S. Residential 15.2 17.0 17.3 20.6 19.4 U.S. Power Plant 29.1 31.2 30.2 29.0 23.8 U.S. Industrial 23.6 24.4 24.2 23.6 26.8 U.S. Plant Fuel 5.0 4.9 4.9 5.0 5.0 U.S. Pipe Distribution 2.3 2.4 2.4 2.3 2.3 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 85.8 91.6 90.7 93.7 89.7 Total U.S. Demand 109.1 114.0 114.0 114.7 107.3 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 84 84 83 107 81 Jan-Jul 83 83 77 102 79 Oct-Sep 84 85 76 103 81 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Mar 22 Mar 15 Mar 8 Mar 1 Feb 23 Wind 14 15 15 14 13 Solar 5 5 4 4 4 Hydro 8 8 7 7 7 Other 1 1 1 1 1 Petroleum 0 0 0 0 0 Natural Gas 40 38 39 38 40 Coal 12 12 13 16 15 Nuclear 21 21 21 21 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 1.55 1.54 Transco Z6 New York 1.54 1.46 PG&E Citygate 2.29 2.37 Eastern Gas (old Dominion South) 1.48 1.40 Chicago Citygate 1.55 1.48 Algonquin Citygate 1.67 1.62 SoCal Citygate 1.57 1.63 Waha Hub 1.43 0.14 AECO 1.31 1.26 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 23.75 24.00 PJM West 31.00 28.50 Ercot North 22.00 23.88 Mid C 23.64 33.00 Palo Verde 2.50 15.50 SP-15 1.50 12.00 (Reporting by Scott DiSavino Editing by Marguerita Choy and Mark Potter)