U.S. natural gas futures slipped more than 1% in choppy trading on Wednesday on forecasts for slightly less cold weather than previously expected and strong production levels.
Front-month gas futures for January delivery were down 10.6 cents, or 1.5%, to $7.129 per million British thermal units (mmBtu) as of 10:28 a.m. EST (1529 GMT).
“The forecasts appear to be kind of waffling a little bit back and forth on some cold weather expected around the corner, but we just don’t know when it’s going to show up,” said Thomas Saal, senior vice president for energy at StoneX Financial Inc.
Data provider Refinitiv forecasted 406 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states, which was slightly lower than Refinitiv’s outlook on Tuesday.
“For now, the near-term temperature outlook isn’t intensely cold enough to spark any concerns about a widening of the storage deficit,” analysts at energy consulting firm Gelber & Associates said in a note.
Gas was trading at $39 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $30 at the Japan Korea Marker (JKM) in Asia.
Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 99.6 bcfd in November, up from 99.4 bcfd in October.
“Production remains on the upswing with a record pace still on the table in providing an upside price limiter,” energy consulting firm Ritterbusch and Associates said in a note.
However, U.S. gas futures are up about 91% so far this year as much higher global prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.
Meanwhile, Freeport LNG has said it plans to start producing LNG again in mid-December and reach full capacity of about 2.1 billion cubic feet per day (bcfd) in March.
Freeport LNG, however, has not yet submitted a request to restart the plant to the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), sources familiar with the company’s filings have told Reuters.
The plant was shut on June 8 due to an explosion caused by inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired by the company to review the incident and propose corrective actions.