HomeNewsUpdate: U.S. natgas prices climb 4% to 13-month high on lower output, rising LNG feedgas

Update: U.S. natgas prices climb 4% to 13-month high on lower output, rising LNG feedgas

12/19/2024
  • Utilities likely pulled more gas out of storage than usual last week
  • S. LNG feedgas on track to hit 11-month high
  • New England to get first LNG cargo of the winter season soon

U.S. natural gas futures climbed about 4% to a 13-month high on Thursday on lower output in recent days and an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants to an 11-month high.

That price increase also came ahead of a federal report expected to show utilities pulled a bigger-than-usual 126 Bft3 of gas out of storage during the week ended Dec. 13. That compares with a decrease of 92 Bft3 during the same week last year and a 5-yr average draw of 78 Bft3 for this time of year.

Analysts, however, projected rising output so far this month and forecasts for mild weather and low heating demand through the start of the new year should keep storage withdrawals smaller than normal in coming weeks. There was currently about 4% more gas in storage than usual for this time of year.

Front-month gas futures for January delivery on the New York Mercantile Exchange rose $0.12, or 3.6%, to $3.494 per million British thermal units (MMBtu), putting the contract on track for its highest close since November 2023.

With the front-month up about 9% over the past three days, the premium of futures for January over February jumped to a record high of $0.28 per MMBtu.

Supply and demand. Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 103.0 Bft3d so far in December, up from 101.5 Bft3d in November. That compares with a record 105.3 Bft3d in December 2023.

On a daily basis, however, output was on track to drop by 2.2 Bft3d over the past six days to a preliminary four-week low of 101.9 Bft3d on Thursday. Analysts noted that preliminary data was often revised later in the day.

Meteorologists projected weather in the Lower 48 would remain mostly warmer than normal through at least Jan. 3.

But with seasonally colder weather coming - it is usually colder in January than December - LSEG forecast average gas demand in the Lower 48, including exports, would rise from 124.6 Bft3d this week to 127.7 Bft3d next week. The forecast for this week was higher than LSEG's outlook on Wednesday, while its forecast for next week was lower.

The amount of gas flowing to the eight big LNG export plants in the U.S. rose to an average of 14.1 Bft3d so far in December, up from 13.6 Bft3d in November. That compares with a monthly record high of 14.7 Bft3d in December 2023.

On a daily basis, LNG feedgas was on track to reach an 11-month high of 14.9 Bft3d with flows rising to a seven-month high of 5.1 Bft3d at Cheniere Energy's 4.5- Bft3d Sabine Pass in Louisiana and a record 400 MMft3d at Venture Global LNG's 2.6-Bft3d Plaquemines under construction in Louisiana.

In other LNG news, the Seapeak Catalunya LNG vessel anchored outside Boston with what will likely be New England's first LNG cargo of the winter - this one from Trinidad and Tobago. Last winter, Constellation Energy's Everett LNG terminal in Massachusetts received six cargoes from December 2023–March 2024 - five from Trinidad and one from Norway, according to LSEG data.

New England power generators often switch from relatively cheap pipeline gas to more expensive oil and gas from LNG imports because gas pipelines into the six-state region cannot carry enough supply to heat the region's homes and businesses and fuel its power plants on the coldest winter days.

 

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