US NatGas up as LNG feedgas rises, Frigid Temps Forecast

(c) Tensorspark / Adobestock

U.S. natural gas futures edged up about 1% on Thursday on near record flows to liquefied natural gas (LNG) export plants and forecasts for colder weather and higher heating demand over the next two weeks than previously expected.

Also supporting U.S. futures, traders noted that European gas prices climbed to a 13-month high due to cold weather and the expiration of a deal that allowed Russia to pipe gas to Europe across Ukraine. [NG/EU]

Front-month gas futures <NGc1> for February delivery on the New York Mercantile Exchange was up 3 cents, or 0.8%, to $3.663 per million British thermal units (mmBtu) at 10:38 a.m. EST (1538 GMT).

In the spot market, frigid weather moving across parts of the U.S. boosted next-day gas prices at the Henry Hub benchmark <NG-W-HH-SNL> in Louisiana and in Chicago <NG-CG-CH-SNL> to their highest levels since January 2024.

SUPPLY AND DEMAND

Financial firm LSEG said average gas output in the Lower 48 U.S. states has risen to 105.0 billion cubic feet per day (bcfd) so far in January, up from 103.8 bcfd in November. That compares with a record 105.3 bcfd in December 2023.

Meteorologists project weather in the Lower 48 states would turn from mostly near normal from Jan. 2-5 to colder than normal from Jan. 6-17.

With colder weather coming, LSEG forecast average gas demand in the Lower 48, including exports, would jump from 119.3 bcfd this week to 144.8 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday before the New Year's holiday on Wednesday.

The amount of gas flowing to the eight big U.S. LNG export plants has risen to an average of 14.9 bcfd so far in January, up from 14.4 bcfd in December. That compares with a monthly record high of 14.7 bcfd in December 2023.

Despite recent increases, LNG feedgas - the fastest growing source of U.S. gas demand growth in recent years - eased to 13.07 bcfd in 2024 from 13.09 bcfd in 2023, the first annual decline since the country started exporting the super-chilled fuel from the Lower 48 states in 2016.

The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices feed demand for more exports due in part to supply disruptions and sanctions linked to Russia's invasion of Ukraine in February 2022.

Gas was trading around $15 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe <TRNLTTFMc1>, a 13-month high, and $14 at the Japan-Korea Marker (JKM) <JKMc1> benchmark in Asia. [NG/EU]