U.S. natural gas futures climbed about 3% to a one-week high on Wednesday on record flows to liquefied natural gas (LNG) export plants, the expiration of a lower-priced contract, forecasts for colder weather and higher demand, and a bigger-than-expected storage withdrawal.
Limiting gains were record output, ample amounts of gas in storage and lower gas prices in Europe on Ukraine peace talks.
On its first day as the front-month, gas futures for January delivery on the New York Mercantile Exchange rose 12.1 cents, or 2.7%, to $4.602 per million British thermal units (mmBtu), putting the contract on track for its highest close since November 13.
On Tuesday, when futures for December were still the front-month, the contract closed at its lowest since November 18.
The U.S. Energy Information Administration (EIA) said energy firms pulled 11 billion cubic feet (bcf) of gas out of storage during the week ended November 21.That was bigger than the 2-bcf withdrawal analysts forecast in a Reuters poll and compares with a decline of two bcf during the same week last year and an average decline of 25 bcf over the past five years (2020-2024).
SUPPLY AND DEMAND
LSEG said average gas output in the Lower 48 states rose to 109.7 billion cubic feet per day (bcfd) so far in November, up from 107.4 bcfd in October and a record monthly high of 108.3 bcfd in August.
Record output this year has allowed energy companies to stockpile more gas than usual, with about 4% more gas in storage than is normal for this time of year.
Meteorologists forecast temperatures across the country will remain mostly colder than normal through December 11.
LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 122.6 bcfd this week to 140.1 bcfd next week. The forecast for this week was higher than LSEG’s outlook on Tuesday, while its forecast for next week was lower.
Average gas flows to the eight big LNG export plants operating in the U.S. rose to 18.1 bcfd so far this month, up from a record 16.6 bcfd in October.
On a daily basis, LNG export feedgas was on track to reach 18.9 bcfd on Wednesday, up from the current all-time daily high of 18.6 bcfd on November 15.
In other LNG news, the Imsaikah LNG vessel was moving across the Caribbean Sea on its way to Exxon Mobil/QatarEnergy’s 2.4 bcfd Golden Pass LNG export plant under construction in Texas, according to LSEG data and analyst comments.
The ship, expected to arrive at Golden Pass around November 29, is carrying LNG from Qatar that traders and analysts say will be used to cool equipment as part of the commissioning of the plant. The facility is expected to start producing LNG this year or early next year.
(Reporting by Scott DiSavino in New York; Editing by Kirsten Donovan and David Gregorio)