U.S. natural gas futures jumped about 9% to a three-week high on Monday on forecasts for cooler weather and more heating demand over the next two weeks than previously expected.
Prices were also rising as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants remained on track to hit a record high for a second month in a row in April after Freeport LNG’s export plant in Texas exited an eight-month outage in February.
Front-month gas futures for May delivery on the New York Mercantile Exchange were up 18 cents, or 8.5%, to $2.294 per million British thermal units (mmBtu) at 9:33 a.m. EDT (1333 GMT), putting the contract on track for its highest close since March 21.
That would be the front-month’s biggest daily percentage gain since it rose 11.4% on Feb. 27.
With prices up 5% last week, gas speculators reduced their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges to their lowest since late March, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
Two weeks ago when gas prices fell about 9%, those speculators boosted their net shorts for the first time in six weeks.
In the spot market, meanwhile, next-day gas for Monday at the Henry Hub benchmark in Louisiana fell to $1.87 per mmBtu, its lowest since October 2020.
Freeport LNG’s export plant, which shut in June 2022 after a fire, was on track to keep pulling in about 2.2 billion cubic feet per day (bcfd) of gas on Monday, the same as its two-week average, according to data provider Refinitiv.
That was above the 2.1 bcfd of gas Freeport LNG can turn into LNG for export. LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power equipment used to produce LNG.
Average gas flows to all seven big U.S. LNG export plants have risen to 14.0 bcfd so far in April, up from a record 13.2 bcfd in March.
The seven big U.S. LNG export plants can turn about 13.8 bcfd of gas into LNG.
SUPPLY AND DEMAND
Refinitiv said average gas output in the U.S. Lower 48 states had risen to 100.1 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January.
Meteorologists projected the weather in the Lower 48 states would remain mostly colder than normal from April 17-25 before turning near normal from April 26-May 2.
With the weather expected to remain cooler for longer, Refinitiv forecast U.S. gas demand, including exports, would rise from 94.1 bcfd this week to 94.8 bcfd next week.
Mostly mild weather during the winter of 2022-2023 allowed utilities to leave more gas in storage than usual.
Gas stockpiles were about 19% above their five-year average (2018-2022) during the week ended April 7 and were expected to end about 23% above normal during the warmer-than-normal week ended April 14, according to federal data and analysts’ estimates.