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 billion cubic feet (bcf) of gas out of storage during the week ended Dec. 13. That compares with a decrease of 92 bcf during the same week last year and a five-year average draw of 78 bcf 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 NGc1 for January delivery on the New York Mercantile Exchange rose 12 cents, or 3.6%, to $3.494 per million British thermal units (mmBtu) at 9:10 a.m. EST (1410 GMT), 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 NGF25-G25 jumped to a record high of 28 cents per mmBtu.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 103.0 billion cubic feet per day (bcfd) so far in December, up from 101.5 bcfd in November. That compares with a record 105.3 bcfd in December 2023.
On a daily basis, however, output was on track to drop by 2.2 bcfd over the past six days to a preliminary four-week low of 101.9 bcfd 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 bcfd this week to 127.7 bcfd 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 bcfd so far in December, up from 13.6 bcfd in November. That compares with a monthly record high of 14.7 bcfd in December 2023.
On a daily basis, LNG feedgas was on track to reach an 11-month high of 14.9 bcfd with flows rising to a seven-month high of 5.1 bcfd at Cheniere Energy’s LNG.N 4.5-bcfd Sabine Pass in Louisiana and a record 0.4 bcfd at Venture Global LNG’s 2.6-bcfd Plaquemines under construction in Louisiana.
In other LNG news, the Seapeak Catalunya C}KL7309482782 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 CEG.O 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.
Source: Reuters (Reporting by Scott DiSavino)