US natgas futures drift lower

NEW YORK: US natural gas futures fell about 4% to a four-week low on Monday on rising output and forecasts for milder weather and lower heating demand next week than previously expected that should allow utilities to start injecting gas into storage at the beginning of April.

That price drop came even though the amount of gas flowing to liquefied natural gas (LNG) export plants was on track to rise to a monthly record high in March after Freeport LNG’s export plant in Texas exited an eight-month outage in February. Freeport LNG shut due to a fire in June 2022.

Front-month gas futures for April delivery fell 8.8 cents, or 4.0%, to $2.128 per million British thermal units (mmBtu) at 8:54 a.m. EDT (1254 GMT), putting the contract on track for its lowest close since Feb. 21 when it settled at a 29-month low of $2.073.

Even though gas prices were down about 53% so far this year, gas speculators last week cut their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges for a fourth week in a row to their lowest since August 2022, according to the US Commodity Futures Trading Commission’s Commitments of Traders report.

That was the first time speculators cut their net short positions for four consecutive weeks since April 2022.

Freeport LNG’s export plant was on track to pull in about 1.5 billion cubic feet per day (bcfd) of gas on Monday, up from 0.6 bcfd on Sunday, according to Refinitiv data. On March 8, Freeport LNG said it anticipated feedgas flows would rise and fall as the plant returns to full production over the “next few weeks.”

Sources familiar with the plant, however, said Freeport LNG had canceled some cargoes due to issues with one of the facility’s three liquefaction trains and could take longer than the company expects to return to full service. Liquefaction trains turn gas into LNG for export.

When operating at full power, Freeport LNG can turn about 2.1 bcfd of gas into LNG for export.

Total gas flows to all seven of the big US LNG export plants rose to an average of 13.0 bcfd so far in March, up from 12.8 bcfd in February. That would top the monthly record of 12.9 bcfd in March 2022, before the Freeport LNG facility shut.