US natgas prices rise to one-week high on colder forecasts, rising LNG feedgas

NEW YORK: US natural gas futures climbed about 2% to a one-week high on Friday on forecasts calling for colder weather over the next two weeks and an expected increase in the amount of gas flowing to liquefied natural gas (LNG) export plants, due in part to signs Freeport LNG’s plant in Texas was back in service after an outage.Front-month gas futures for February delivery on the New York Mercantile Exchange rose 8.2 cents, or 2.1%, to settle at $4.027 per million British thermal units, their highest close since Jan. 16.

For the week, the contract was up about 2% after easing about 1% last week.

To meet record demand for gas for heat during extreme cold weather this week, analysts projected energy firms pulled 317 billion cubic feet (bcf) of gas out of storage during the week ended Jan. 24. If correct, that would only be the fourth time utilities pulled over 300 bcf from storage in a week, but would fall short of the weekly record 359 bcf withdrawn during a freeze in January 2018.

Analysts noted this week’s decline should erase the small surplus of gas in inventory over the five-year average for the first time since January 2022, and could boost total withdrawals for the month to a record high. The current all-time monthly withdrawal of 994 bcf was set in January 2022, according to federal energy data.

Financial firm LSEG said average gas output in the Lower 48 US states fell from 104.2 billion cubic feet per day (bcfd) in December to 101.9 bcfd so far in January, due mostly to freezing oil and gas wells and pipes, known as freeze-offs. That compares with a monthly record of 104.5 bcfd in December 2023. Freeze-offs from Jan. 18-21 cut output by 6.9 bcfd to a one-year low of 96.9 bcfd on Tuesday. About 5.1 bcfd of that output, however, was already on track to return by Friday.

In past years, freeze-offs cut gas output by roughly 8.1 bcfd from Jan. 9-16 in 2024, 4.6 bcfd from Jan. 31-Feb. 1 in 2023, 15.8 bcfd from Dec. 20-24 in 2022, and 20.4 bcfd from Feb. 8-17 in 2021, according to LSEG data.

Meteorologists projected that weather in the Lower 48 states would remain colder than normal through Jan. 27, before turning mostly near normal from Jan. 28-Feb. 8.

With the milder weather coming, LSEG forecast average gas demand in the Lower 48 states, including exports, would fall from 156.9 bcfd this week to 142.0 bcfd next week and 133.5 bcfd in two weeks. The forecasts for this week and next were similar to LSEG’s outlook on Thursday. On a daily basis, LSEG said total gas use peaked at 173.3 bcfd on Jan. 20 and 181.3 bcfd on Jan. 21, easily topping the prior daily record high of 168.4 bcfd on Jan. 16, 2024. The amount of gas flowing to the eight big US LNG export plants rose to an average of 14.7 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.

On a daily basis, however, LNG feedgas was on track to reach 13.4 bcfd on Friday, up from a nine-month low of 10.6 bcfd on Thursday when Freeport LNG’s 2.1-bcfd plant was only pulling in about 0.1 bcfd and Cheniere Energy’s 2.4-bcfd Corpus Christi plant in Texas was only pulling in about 1.0 bcfd, a 33-month low.