U.S. natural gas futures edged up about 1% on Tuesday as flows to liquefied natural gas (LNG) export plants remain near record highs.

Front-month gas futures for March delivery on the New York Mercantile Exchange rose 4.8 cents, or 1.2%, to $4.042 per million British thermal units (mmBtu) at 8:01 a.m. EST (1301 GMT).

That small price increase came despite near record output so far this month and forecasts for milder weather and lower heating demand this week than previously expected that should allow utilities to pull less gas out of storage than normal for this time of year.

Traders, however, noted extreme cold earlier this year forced energy firms to pull huge amounts of gas out of storage, including record amounts in January, cutting stockpiles to about 11% below the five-year (2020-2024) usual.

SUPPLY AND DEMAND

Financial company LSEG said average gas output in the Lower 48 U.S. states rose to 104.5 billion cubic feet per day (bcfd) so far in February from 102.7 bcfd in January, when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 bcfd in December 2023.

Over the past couple of weeks, daily output dropped from a record high of 106.7 bcfd on February 6 to a three-week low of 100.5 bcfd on February 19 as extreme cold across much of the country froze wells before rising to a one-week high of 104.3 bcfd on February 25 as milder weather unfroze those wells.

Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through March 12.

With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 124.8 bcfd this week to 118.4 bcfd next week. The forecast for this week was lower than LSEG’s outlook on Monday.

The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.6 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December 2023.

On a daily basis, LNG feedgas hit a record 16.4 bcfd on Sunday, topping the prior all-time high of 16.3 bcfd on February 19.

The LNG daily feedgas high occurred as flows to Venture Global’s 3.2-bcfd Plaquemines LNG export plant under construction in Louisiana hit a record 1.8 bcfd on Sunday.

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

Gas was trading at around $14 per mmBtu at both the Dutch Title Transfer Facility (TTF) (TRNLTTFMc1) benchmark in Europe and the Japan Korea Marker (JKM) (JKMc1) benchmark in Asia.
Source: Reuters