U.S. natural gas futures jumped about 12% to a six-week high on Monday on forecasts for colder weather and more heating demand in mid to late November than previously expected.
The “transition from blowtorch heat to Arctic air jolts natural gas. Winter will start this weekend,” analysts at energy consulting firm EBW Analytics said in a report.
Freeport LNG submitted a draft Root Cause Failure Analysis to the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) on Nov. 1, according to sources familiar with the filing. By the end of last week, however, Freeport LNG had not yet submitted a request to resume service.
Freeport LNG has said it still expects the 2.1-billion-cubic-feet-per-day (bcfd) export plant to return to at least partial service in early to mid-November following an unexpected shutdown on June 8 caused by a pipeline explosion.
Several vessels were lined up to pick up LNG from Freeport, according to Refinitiv data. Prism Brilliance, Prism Diversity and Prism Courage were waiting offshore from the plant, while LNG Rosenrot and Prism Agility were expected in late November.
One factor expected to pressure futures lower later this week was expectations Subtropical Storm Nicole could hit Florida, Georgia and the Carolinas later this week. Traders noted storms can cause power outages that reduce demand for gas-fired generation.
Front-month gas futures NGc1 rose 79.3 cents, or 12.4%, to $7.193 per million British thermal units (mmBtu) at 11:01 a.m. EST (1601 GMT), putting the contract on track for its highest close since Sept. 21.
That would be the biggest one-day percentage gain since July 7 when the contract gained about 14%.
In the spot market, meanwhile, unusually warm weather so far in November, pressured power prices in New England and Texas to their lowest since 2021, and gas prices in New England, Pennsylvania, New York and Chicago to their lowest since 2020.
Overall, gas futures were up about 93% so far this year as much higher global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.
Gas was trading at $33 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe TRNLTTFMc1 and $29 at the Japan Korea Marker (JKM) in Asia JKMc1.
TOP PRODUCER
U.S. gas futures lag far behind global prices because the United States is the world’s top producer with all the fuel it needs for domestic use, while capacity constraints and the Freeport outage have prevented the country from exporting more LNG.
Data provider Refinitiv said that average gas output in the U.S. Lower 48 states fell to 98.3 bcfd so far in November, down from a record 99.4 bcfd in October. Traders, however, noted that early-month output figures were usually revised higher later in the month.
With the coming of seasonally colder weather, Refinitiv projected average U.S. gas demand, including exports, would jump from 98.9 bcfd this week to 122.8 bcfd next week. The forecast for this week was lower than Refinitiv’s outlook on Friday, while its forecast for next week was higher.
The average amount of gas flowing to U.S. LNG export plants rose to 11.7 bcfd so far in November, up from 11.3 bcfd in October.
Source: Reuters (Reporting by Scott DiSavino Editing by Tomasz Janowski and Josie Kao)