By Brijesh Patel

March 7 (Reuters) - U.S. natural gas futures dropped more than 3% on Friday, weighed down by forecasts for warmer-than-normal weather and lower heating demand over the next two weeks than previously expected.

Front-month gas futures NGc1 for April delivery on the New York Mercantile Exchange were down 14.6 cents, or 3.4%, to $4.160 per million British thermal units (mmBtu) at 8:53 a.m. EST (1353 GMT).

"A further shift toward mild temperatures, especially next week that will see 60 degrees or higher across northern Illinois, has driven much of the apparent long liquidation," energy advisory firm Ritterbusch and Associates said in a note.

"But we also feel that the tariff issue that likely contributed to the big Tuesday price spike has also been pushed to the background as the Canadian levies have apparently been pushed back another month."

Gas prices spiked earlier this week on record flows to liquefied natural gas export $(LNG)$ plants and worries Canada would reduce power and gas exports to the U.S. after U.S. President Donald Trump imposed tariffs on Canada and Mexico on March 4.

In 2024, Canada supplied about 8% of total U.S. gas demand, including exports, and about 1% of total U.S. power demand, again including exports. Some of those power and gas exports returned to Canada.

Prices are up about 10% so far this week despite near-record output and forecasts for mostly mild weather through mid-March, which should allow utilities to pull less gas out of storage over the next week or two.

The U.S. Energy Information Administration $(EIA)$ on Thursday said energy firms pulled 80 billion cubic feet (bcf) of gas out of storage during the week ended February 28.

Extreme cold weather earlier this year forced energy firms to pull massive amounts of gas out of storage, including record amounts in January, leaving current stockpiles about 11.3% below the five-year (2020-2024) normal for this time of year.

SUPPLY AND DEMAND

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, according to LSEG data.

On a daily basis, however, output was on track to decline by 2.3 bcfd over the past seven days to a preliminary one-week low of 104.6 bcfd on Friday, down from a three-week high of 106.9 bcfd on February 28. That compares with an all-time daily high of 107.2 on February 6.

In the import market, Canadian gas exports to the U.S. have dropped to an average of 8.2 bcfd over the past few days since Trump's tariffs were imposed, down from an average of 9.8 bcfd during the prior 11-day period from February 21 to March 3, according to LSEG data.

That compares with an average of 8.6 bcfd of Canadian gas exports to the U.S. in 2024 and 7.6 bcfd over the prior five years (2019-2023).

Meteorologists projected weather in the Lower 48 states would turn from mostly warmer than normal from March 6-15 to mostly colder than normal from March 16-21.

LSEG forecast average gas demand in the Lower 48, including exports, will fall from 110.4 bcfd this week to 109.5 bcfd next week. Those forecasts were lower compared to LSEG's outlook on Thursday.

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.

text_section_type="notes">For gas data on the LSEG terminal type ENERGY in the search bar and then go to the GAS drop down and the NORTH AMERICA drop down.For Interactive Map, type 'Interactive Map' in the box at upper left of the LSEG terminalFor graphics on Baker Hughes rig counts, see: http://graphics.thomsonreuters.com/15/rigcount/index.htmlFor next-day SNL U.S. gas prices, see: 0#SNL-NGFor next-day SNL U.S. power prices, see: 0#SNL-PWRFor U.S. natgas price and storage polls, see: NGAS/POLLFor U.S. nuclear power outages, see: NUKE/For U.S. Northwest hydro power report, see: NWRFCFor U.S./Canada natural gas rig count vs Henry Hub futures price, see: http://tmsnrt.rs/2eT9k44For the U.S. natural gas speed guide, see: USGASFor the U.S. power speed guide, see: USPOWERTo determine CFTC managed money net position add (NYMEX Henry Hub options and futures combined 3023651MNET) plus (ICE Henry Hub options and futures combined 3023391MNET divided by four) plus (NYMEX Henry Hub swaps options and futures combined 303565BMNET divided by four) plus (NYMEX Henry Hub penultimate gas swaps 303565CMNET divided by four)NYMEX Henry Hub options and futures combined 0#3CFTC023651NYMEX Henry Hub futures only 0#1CFTC023651ICE Henry Hub options and futures combined 0#3CFTC023391NYMEX Henry Hub swaps options and futures combined 0#3CFTC03565BNYMEX Henry Hub Penultimate gas swaps 0#3CFTC03565C

(Reporting by Brijesh Patel in Bengaluru; Editing by Paul Simao)

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