U.S. natural gas futures on Thursday held near a nine-month low on forecasts for the weather to remain warmer than normal through at least the middle of February, keeping heating demand for the fuel low.
That lack of price movement occurred despite a bullish drop in output so far this week and forecasts for more demand next week than previously expected, and the bearish ongoing outage of a liquefaction train at U.S. energy firm Freeport LNG’s export plant in Texas. The Freeport outage leaves more gas in the country.
Front-month gas futures for March delivery on the New York Mercantile Exchange (NYMEX) remained unchanged at $2.100 per million British thermal units (mmBtu) at 8:54 a.m. EST (1354 GMT). That keeps the contract near Monday’s close of $2.08 per mmBtu, which was the lowest settle since mid-April of 2023.
That also kept the contract in technically oversold territory for a third day in a row for the first time since mid-December.
Rising price volatility has increased interest in gas trading in recent weeks, boosting open interest in NYMEX futures to 1.47 million contracts on Jan. 30, the most since February 2020.
SUPPLY AND DEMAND
Financial company LSEG said gas output in the U.S. Lower 48 states has fallen to an average of 103.8 billion cubic feet per day (bcfd) in January, down from a monthly record high of 108.0 bcfd in December.
On a daily basis, gas output was on track to drop about 1.7 bcfd from Jan. 29-Feb. 1 to a preliminary one-week low of 105.4 bcfd after soaring 16.6 bcfd from Jan. 17-28 as wells returned to service after freezing during Arctic cold weather in mid-January.
Meteorologists projected temperatures in the Lower 48 states would remain warmer than normal through at least Feb. 16, but noted that next week would be slightly cooler than this week.
With cooler weather coming, LSEG forecast U.S. gas demand in the Lower 48, including exports, would rise from 126.7 bcfd this week to 127.5 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Wednesday.
Gas flows to the seven big U.S. LNG export plants fell to an average of 13.9 bcfd in January, down from a monthly record of 14.7 bcfd in December.
Analysts said U.S. LNG feedgas would likely not return to record levels until Freeport LNG returns to full power, which is likely to occur in mid- to late-February.
The U.S. became the world’s biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia’s war in Ukraine.
Gas was trading around $9 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $10 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; Editing by Paul Simao)