U.S. natural gas futures edged higher on Tuesday as winter storms across the country curtailed gas output over the weekend offseting pressure from forecasts for less cold weather and lower demand over the next two weeks.
Front-month gas futures rose 3.1 cents, or 0.6%, to $5.110 per million British thermal units (mmBtu) at 10:15 a.m. EST (1513 GMT). The contract lost 23% last week.
“Gas edging higher on storm related supply issues but short-term temperature outlooks still bearish,” analysts at energy consulting firm Ritterbusch and Associates said in a note.
“The volatility in the weather forecasts is, of course, prompting major swings in gas pricing with the market more focused on the imminent warm-up than on last week’s extreme cold.”
Data provider Refinitiv showed average gas output in the U.S. Lower 48 states fell to 80.4 billion cubic feet per day (bcfd) on Saturday, its biggest drop in daily output since the February freeze of 2021 when a winter storm froze gas supplies in Texas and forced that state’s electric grid operator to impose rolling power outages.
Last week, the storms also caused more than a million homes and businesses to lose power on the U.S. East Coast, in the Midwest and Texas.
Meanwhile, U.S. daily demand from the four biggest gas consuming sectors – residential, commercial, power and industrial – reached an all-time high of 148.5 billion cubic feet (bcf) on Friday, according to Refinitiv data.
Refinitiv projected average U.S. gas demand, including exports, would rise from 139.9 bcfd last week to 145.7 bcfd this week before dropping to 113.9 bcfd in two weeks with the weather expected to turn mild in late December-early January.
Freeport LNG said on Friday it was again delaying the restart, this time from the end of the year to the second half of January, pending regulatory approval. The latest delay follows several others from October to November, to December, to around the end of the year.
The Freeport plant shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired to review the incident and suggest action.