U.S. natural gas prices ease 1% on warmer weather forecasts, low LNG feedgas
(Reuters) - U.S. natural gas futures eased about 1% on forecasts for the weather to remain warmer than normal through at least the middle of February and the slow return of U.S. LNG export plants to full service after last week's Arctic freeze.
That freeze boosted gas demand to a daily record high and cut both U.S. gas output and LNG feedgas to one-year lows.
Traders noted that prices fell despite forecasts for higher demand in two weeks when still mild weather will turn slightly cooler than next week, and the slow return of output from last week's extreme cold.
Front-month gas futures for February delivery on the New York Mercantile Exchange were down 3.2 cents, or 1.2%, to $2.539 per million British thermal units (mmBtu) at 9:45 a.m. EST (1445 GMT).
That left the contract little changed so far this week after it dropped by about 24% last week.
SUPPLY AND DEMAND
Financial company LSEG said average gas output in the Lower 48 states has fallen to 103.2 billion cubic feet per day (bcfd) so far in January, down from a monthly record of 108.0 bcfd in December.
On a daily basis, U.S. gas output was on track to jump by 14.6 bcfd from Jan. 17-26 to a preliminary two-week high of 105.1 bcfd on Friday. That, however, was not enough to make up for the 17.2 bcfd output drop from Jan. 8-16 to a 12-month low of 90.5 bcfd on Jan. 16, due primarily to freeze-offs and other cold weather events.
Meteorologists projected temperatures in the Lower 48 states would remain warmer than normal from now through at least Feb. 10. The forecasts for the week of Feb. 4, however, were slightly cooler than the outlook for the week of Jan. 28.
With the weather expected to turn warmer, LSEG forecast U.S. gas demand in the Lower 48, including exports, would drop from 144.6 bcfd this week to 124.9 5 bcfd next week before rising to 127.8 bcfd in two weeks as the weather turns cooler. The forecast for next week was lower than LSEG's outlook on Thursday. That compares with a daily record demand of 168.4 bcfd on Jan. 16 during the arctic freeze.
Gas flows to the seven big U.S. LNG export plants have fallen to an average of 13.8 bcfd so far in January, down from a monthly record of 14.7 bcfd in December.
But on a daily basis, LNG feedgas was on track to rise by about 4.8 bcfd from Jan. 17-26 to a preliminary 14.0 bcfd on Friday after dropping by 5.8 bcfd from Jan. 13-16 to a one-year low of 9.2 bcfd on Jan. 16 during last week's freeze.
The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine.
Global gas was trading around a five-month low of $9 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and near a seven-month low of $9 at the Japan Korea Marker (JKM) benchmark in Asia.
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