U.S. natural gas futures jumped about 6% to a 25-month high on Friday as extreme cold over the past couple of weeks cut output by freezing wells and as gas flows to liquefied natural gas (LNG) export plants hit record highs.
In addition, traders noted that colder temperatures than normal so far this year forced utilities to pull huge amounts of gas out of storage, including record amounts in January, cutting stockpiles down to about 11% below the five-year (2020-2024) normal for this time of year
Front-month gas futures for March delivery on the New York Mercantile Exchange rose 23.7 cents, or 5.7%, to $4.389 per million British thermal units (mmBtu) at 9:25 a.m. EST (1425 GMT), putting the contract on track for its highest close since December 2022.
That kept the contract in technically overbought territory for a fourth day in a row for the first time since October 2024.
For the week, the contract was up about 16%, rising for a third week in a row for the first time since November and gaining around 43% during that time.
SUPPLY AND DEMAND
Financial company LSEG said average gas output in the Lower 48 U.S. states rose to 104.6 billion cubic feet per day (bcfd) so far in February from 102.7 bcfd in January, when freezing oil and gas wells and pipes, known as freeze-offs, cut production. That compares with a monthly record of 104.6 bcfd in December 2023.
But with the return of extreme cold that is again freezing wells in some parts of the country, daily output was on track to drop by around 6.7 bcfd since hitting a record high of 106.7 bcfd on February 6 to a preliminary four-week low of 100.0 bcfd on Friday. Analysts noted preliminary data is often revised later in the day.
Meteorologists projected weather in the Lower 48 states would remain mostly near normal through March 8.
With milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, will fall from 148.4 bcfd this week to 127.9 bcfd next week and 122.9 bcfd in two weeks. The forecasts for this week and next were higher than LSEG’s outlook on Thursday.
The amount of gas flowing to the eight big U.S. LNG export plants rose to an average of 15.5 bcfd so far in February, up from 14.6 bcfd in January. That compares with a monthly record high of 14.7 bcfd in December 2023.
On a daily basis, LNG feedgas was on track to hit a record 16.5 bcfd on Thursday, topping the prior all-time daily high of 16.4 bcfd on Wednesday.
The LNG daily feedgas record occurred as flows to Venture Global’s 3.2-bcfd Plaquemines LNG export plant under construction in Louisiana were on track to hit record highs of 1.6 bcfd from Wednesday to Friday.
The U.S. became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due partly to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine.
Gas was trading at around $15 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and $14 at the Japan Korea Marker (JKM) benchmark in Asia.
Despite efforts by U.S. President Donald Trump to end the war in Ukraine, which some analysts say could free up some Russian energy exports, the European Union said it will seek more gas from countries including the U.S. to replace Russian supplies, and expand renewable energy faster to cut its overall reliance on the fuel.
The EU has pledged to quit Russian fossil fuels by 2027 in response to Moscow’s invasion of Ukraine.
(Reporting by Scott DiSavino; Editing by Paul Simao)