NEW YORK: US natural gas futures fell about 3% to a two-week low on Friday on forecasts for less cold weather and lower demand over the next two weeks than previously expected.
That milder weather should allow utilities to leave more gas in storage. Gas stockpiles were currently about 2.4% below the five-year (2017-2021) average for this time of year.
Another factor weighing on prices this week has been efforts by the US government to reduce the risk of a railroad worker strike. A rail strike would have cut coal deliveries to power plants, forcing generators to burn more gas to produce electricity.
US President Joe Biden is set to sign railroad-related legislation that will block a rail strike that could have wrecked the nation’s economy.
Energy traders said the biggest uncertainty that could boost gas prices was whether Freeport LNG would meet its target to restart the 2.1 billion cubic-feet-per-day (bcfd) liquefied natural gas (LNG) export plant in Texas in mid- December and reach full capacity in March.
The plant shut on June 8 due to an explosion caused by inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired by the company to review the incident and propose corrective actions.
Freeport LNG, however, has not yet submitted a request to restart the plant to the US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), sources familiar with the company’s filings have told Reuters.
A few ships have been waiting - some for weeks - in the Gulf of Mexico to pick up LNG from Freeport, including Prism Brilliance, Prism Diversity and Prism Courage, according to shipping data from Refinitiv.
Front-month gas futures for January delivery on the New York Mercantile Exchange fell 22.7 cents, or 3.4%, to $6.511 per million British thermal units (mmBtu) at 9:48 a.m. EST (1448 GMT), putting the contract on track for its lowest close since Nov. 18. That also put the contract on track to decline about 7% for the week after rising about 19% during the prior two weeks.
In the spot market, meanwhile, gas prices in California have soared about 125% over the past two weeks as freezing weather blankets parts of the state. In the north, the PG&E citygate hit its highest level since February 2014, while in the south, next-day gas at the Southern California Border rose to its highest level since September 2021 for a second day in a row.