NEW YORK: US natural gas futures held near a one-week high on Tuesday on forecasts for more cold weather and higher heating demand this week than previously expected, a preliminary drop in daily output and near record amounts of gas flowing to liquefied natural gas (LNG) export plants.

Weighing on prices were forecasts for less cold weather and lower heating demand next week than previously expected.

After soaring 7% on Monday, front-month gas futures for April delivery remained unchanged at $2.607 per million British thermal units (mmBtu) at 8:09 a.m. EDT (1209 GMT) on Tuesday, putting the contract on track for its highest close since March 7 for a second day in a row.

The gas market has been extremely volatile in recent weeks as traders bet on the latest weather forecasts.

The front-month fell to a 28-month low below $2 per mmBtu in intraday trade on Feb. 22 on forecasts for warmer weather before jumping 9% on colder forecasts to settle at a five-week high above $3 just over a week later on March 3. It plunged 15% on March 6 on a warmer outlook.

Gas flows to LNG export plants have been on track to hit record highs since Freeport LNG’s export plant in Texas exited an eight-month outage in February. The plant was shut due to a fire in June 2022.

Freeport LNG was on track to pull in 1.0 billion cubic feet per day (bcfd) of gas on Tuesday, up from 0.3 bcfd on Monday, according to data provider Refinitiv.

When operating at full power, Freeport LNG, the second-biggest US LNG export plant, can turn about 2.1 bcfd of gas into LNG for export.

Federal regulators approved the restart of two of Freeport LNG’s three liquefaction trains (Trains 2 and 3) in February and the third train (Train 1) on March 8. Liquefaction trains turn gas into LNG.

Total gas flows to all seven of the big US LNG export plants rose to an average of 13.1 bcfd so far in March from 12.8 bcfd in February. That would top the monthly record of 12.9 bcfd in March 2022, before the Freeport LNG facility shut.

The seven big US LNG export plants, including Freeport LNG, can turn about 13.8 bcfd of gas into LNG.

Refinitiv said average gas output in the US Lower 48 states rose to 98.7 bcfd so far in March from 98.2 bcfd in February. That compares with a monthly record of 99.9 bcfd in November 2022.

On a daily basis, however, output was on track to drop by 1.8 bcfd to a preliminary five-week low of 97.5 bcfd on Tuesday. That would be the biggest one-day output decline since late December.

Energy traders said the decline was likely caused by freezing oil and gas wells in several producing basins, known as freeze-offs.

Meteorologists projected the weather in the Lower 48 states would remain mostly colder than normal through March 29 with the coldest days expected on Saturday and Sunday, March 18-19.

Even though the weather will be colder than normal over the next two weeks, temperatures were still rising with the coming of spring.

Refinitiv forecast US gas demand, including exports, would slide from 120.1 bcfd this week to 119.5 bcfd next week. The forecasts for this week were higher than Refinitiv’s outlook on Monday, while its forecasts for next week were lower.

Milder winter weather so far this year has prompted utilities to leave more gas in storage than usual.

Gas stockpiles were about 22% above their five-year average (2018-2022) during the week ended March 3 and were expected to end about 24% above normal during the week ended March 10, according to federal data and analysts’ estimates.—Reuters