U.S. natural gas futures fell over 2% on March 30 with as much as an 8% slide in oil prices and forecasts for milder weather and lower heating demand than earlier expected.

On its first day as the front-month, gas futures for May delivery on the New York Mercantile Exchange fell 4.4 cents, or 2.6%, to $1.627 per million British thermal units at 7:36 a.m. CDT. That is just a few cents over its $1.602 close on March 23, which was its lowest since September 1995.

Oil prices fell sharply, with U.S. crude briefly dropping below $20 and Brent hitting its lowest level in 18 years, on heightened fears that the global coronavirus shutdown could last months and demand for fuel could decline further.

Looking ahead, gas prices in late 2020 and 2021 were trading much higher on expectations demand will rise again with the return of economic growth after governments loosen travel restrictions once the coronavirus spread slows.

Speculators last week cut their net short positions on the NYMEX and Intercontinental Exchange for a fourth week in a row to their lowest since May 2019, according to data from the Commodity Futures Trading Commission.

The premium of futures for November over October, which traders use to bet on demand next winter, rose to its highest since August 2010 for a second day in a row.

Even before the coronavirus started to cut global economic growth and demand for energy, gas was already trading near its lowest in years as record production and months of mild winter weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely.

Analysts project gas stockpiles will hit an all-time high in 2020 as drillers keep producing record amounts of fuel even though demand is expected to slump.

Before the outbreak, analysts projected the United States would export much of its surplus gas to other countries. But suppliers of LNG are flooding the market with excess cargoes

in the face of declining demand, and analysts expect buyers to cancel more U.S. cargoes in coming months as gas prices plunge.

With the coming of spring-like weather, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, would slide from an average of 97.9 billion cubic feet per day (Bcf/d) this week to 94.9 Bcf/d next week. That is much lower than Refinitiv's forecast on March 27 of 98.2 Bcf/d this week and 101.9 Bcf/d next week.

The amount of gas flowing to U.S. LNG export plants edged up to 9.3 Bcf/d on Sunday from 9.2 Bcf/d on March 28, according to Refinitiv. That compares with an average of 9.1 Bcf/d last week and an all-time daily high of 9.5 Bcf/d on Jan. 31.

Gas production in the Lower 48 states eased to 93.8 Bcf/d on March 29 from 93.9 Bcf/d on March 28, according to Refinitiv.