U.S. natural gas futures gained about 3% on Thursday as liquefied natural gas (LNG) exports climbed to near record highs as the sixth liquefaction train at Cheniere Energy Inc’s Sabine Pass export plant in Louisiana continues to ramp up.
Traders noted that price gain came ahead of the release of a federal report expected to show an unusual mid-November build in gas stockpiles when utilities usually start drawing gas out of inventories.
Analysts forecast U.S. utilities added 25 billion cubic feet (bcf) of gas into storage during the week ended Nov. 12. That compares with an increase of 28 bcf in the same week last year and a five-year (2016-2020) average decline of 12 bcf.
If correct, last week’s injection would boost stockpiles to 3.643 trillion cubic feet (tcf), which would be 2.2% below the five-year average of 3.725 tcf for this time of year.
U.S. LNG exports were rising just in time to help Europe refill gas stockpiles after prices in Europe soared over 25% earlier this week as governments there worry Russian gas company Gazprom PAO may not deliver enough fuel to Europe for this winter. Those worries came after Germany’s energy regulator suspended the approval process for Gazprom’s Nord Stream 2 gas pipe from Russia to Germany.
Global gas prices hit record highs over the past couple of months as utilities around the world scramble for LNG cargoes to replenish extremely low stockpiles in Europe and meet insatiable demand in Asia, where energy shortfalls have caused power blackouts in China.
Following those global gas prices, U.S. futures climbed to a 12-year high in early October on expectations LNG demand would remain strong for months. But overseas prices were still trading over six times higher than U.S. futures because the United States has plenty of gas in storage and ample production.
Analysts have said European inventories were about 17% below normal for this time of year, compared with just 3% below normal in the United States.
After dropping 7% on Wednesday, front-month gas futures rose 15.8 cents, or 3.3%, to $4.974 per million British thermal units (mmBtu) at 8:50 a.m. EST (1350 GMT) on Thursday.
Data provider Refinitiv said output in the U.S. Lower 48 states averaged 96.0 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019.
Refinitiv projected average U.S. gas demand, including exports, would jump from 104.2 bcfd this week to 112.2 bcfd next week as the weather turns colder and homes and businesses crank up their heaters. That is the same as Refinitiv’s forecast on Wednesday.
The amount of gas flowing to U.S. LNG export plants averaged 11.1 bcfd so far in November, up from 10.5 bcfd in October. That compares with a monthly record of 11.5 bcfd in April.
On a daily basis, feed gas to the LNG plants were expected to reach 11.97 bcfd on Thursday, their highest in a day since hitting a record 11.99 bcfd in March.