U.S. Natural Gas Futures Rise 4% on Strong LNG Export Flows
Near-record LNG export flows and stronger demand forecasts lifted U.S. natural gas futures, pushing prices out of oversold territory despite ample supply and warmer-than-normal weather outlooks.
(Reuters) — U.S. natural gas futures climbed about 4% on Wednesday on near-record gas flows to liquefied natural gas (LNG) export plants and forecasts for more demand next week than previously expected.
Front-month gas futures for January delivery on the New York Mercantile Exchange rose 13.8 cents, or 3.6%, to settle at $4.024 per million British thermal units (MMBtu). On Dec. 16, the contract closed at its lowest since October 29.
That pushed the front-month out of technically oversold territory for the first time in four days.
Supply and Demand
Average gas output in the Lower 48 states eased to 109.5 billion cubic feet per day (billion cubic feet per day) so far in December, down from a monthly record high of 109.6 billion cubic feet per day in November, LSEG said.
Record output has allowed energy companies to stockpile more gas than usual so far this year, leaving the amount of fuel in storage at about 1% above normal.
Meteorologists forecast weather across the country would remain mostly warmer than normal through January 1, keeping the amount of gas needed to heat homes and businesses lower than usual for this time of year.
LSEG projected average gas demand in the Lower 48 states, including exports, would fall from 145.1 billion cubic feet per day this week to 131.1 billion cubic feet per day next week. The forecast for this week was lower than LSEG's outlook on Tuesday, while the forecast for next week was higher.
Average gas flows to the eight large U.S. LNG export plants rose to 18.6 billion cubic feet per day so far this month, up from a monthly record high of 18.2 billion cubic feet per day in November.
Elsewhere, Freeport LNG's export plant in Texas was on track to take in more gas on Dec. 17 in a sign that one of its three liquefaction trains has returned to service after shutting down on Dec. 16.
The U.S. became the world's biggest LNG exporter in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia's 2022 invasion of Ukraine.
Gas was trading near $9 per MMBtu around the world, which was a 19-month low at the Dutch Title Transfer Facility (TTF) benchmark in Europe and a 20-month low at the Japan-Korea Marker (JKM) in Asia.
Global prices have declined in recent weeks with the slow start of the winter heating season and hopes peace talks over Ukraine could result in the lifting of sanctions against Moscow.
That could allow Russia, the world's second-biggest gas producer behind the U.S., to export more fuel in the future.