Adds EIA storage report and latest prices

By Scott DiSavino

NEW YORK, Jan 8 (Reuters) - U.S. natural gas futures slid about 3% on Thursday on a small rise in daily output and forecasts for the weather to remain mostly mild over the next two weeks, keeping heating demand lower than usual.

Front-month gas futures for February delivery NGc1 on the New York Mercantile Exchange fell 9.7 cents, or 2.8%, to $3.428 per million British thermal units.

Futures fell despite a federal report showing last week's storage withdrawal was bigger than usual for this time of year, near record liquefied natural gas (LNG) exports, and - despite the current mild weather - forecasts for seasonally cold weather and higher demand for at least a few days in late January.

The U.S. Energy Information Administration (EIA) said energy firms pulled 119 billion cubic feet (bcf) of gas out of storage during the week ended January 2.

That was slightly bigger than the 114 bcf draw analysts forecast in a Reuters poll, and compares with a decline of 51 bcf during the same week last year and an average withdrawal of 92 bcf over the past five years (2021-2025). EIA/GAS NGAS/POLL

In the cash market, average prices at the Waha Hub in the Permian Shale in West Texas fell into negative territory for the second time this month as pipeline constraints trapped gas in the nation's biggest oil-producing basin.

Negative prices have caused Waha prices to average negative 73 cents per mmBtu so far this year, compared with an average of $1.15 per mmBtu in 2025 and $2.88 during the past five years (2021-2025).

Daily Waha prices first averaged below zero in 2019. It did so 17 times in 2019, six times in 2020, once in 2023, a record 49 times in 2024, and 39 times in 2025.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 states has fallen to 109.1 billion cubic feet per day (bcfd) so far in January, down from a monthly record high of 109.7 bcfd in December.

Despite forecasts for a slight cooling, meteorologists projected weather across the country would remain mostly warmer than normal through January 23, keeping the amount of gas needed to heat homes and businesses lower than usual for this time of year.

LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 132.0 bcfd this week to 133.6 bcfd next week. Those forecasts were higher than LSEG's outlook on Wednesday.

Average gas flows to the eight large U.S. LNG export plants have risen to 18.5 bcfd so far in January, up from a monthly record high average of 18.4 bcfd in December.

The U.S. became the world's biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia's 2022 invasion of Ukraine.

Gas was trading around $9 per mmBtu at the Dutch Title Transfer Facility (TTF) TRNLTTFMc1 benchmark in Europe and $10 at the Japan-Korea Marker (JKM) JKMc1 benchmark in Asia. NG/EU

Global prices have declined to multi-month lows over the past month or so on hopes that peace talks over the war in Ukraine could result in the lifting of sanctions against Moscow. Such a development could allow Russia, the world's second-biggest gas producer behind the U.S., to export more fuel in the future.

(Reporting by Scott DiSavino; Editing by Paul Simao and Susan Fenton)

((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net/))