U.S. natgas holds near 25-month low on milder Feb weather forecast

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U.S. natural gas futures held near a 25-month low on Monday as rising output and forecasts

for warmer weather and lower demand next week than previously expected offset a colder outlook with more heating

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demand for this week.

That lack of price movement came despite a growing belief that Freeport LNG’s export terminal in Texas will soon

start pulling in more gas to produce liquefied natural gas (LNG). Analysts, however, have said they still do not

expect Freeport to return to full LNG production until mid-March or later.

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Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 20 except for a few colder

than normal days around the Feb. 18-19 weekend. Traders noted cold on the weekend does not have the same impact on

usage as cold during the workweek because usage is low on weekends when many businesses shut.

Freeport LNG told Texas state regulators last week that it would start sending gas to one of three liquefaction

trains at its long-shut export plant. The plant is waiting for permission from federal regulators to start loading LNG

to free up space in its storage tanks. The liquefaction trains turn gas into LNG for export.

Freeport, the second-biggest U.S. LNG export plant, shut after a fire in June 2022. The energy market expects gas

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prices to rise once the plant starts producing LNG again. When operating at full power, Freeport can turn about 2.1

billion cubic feet (bcf) of gas into LNG each day. That is about 2% of total U.S. daily gas production.

Federal regulators will hold a public meeting on Freeport on Feb. 11 to provide members of the community and other

interested parties an opportunity to voice their concerns about Freeport’s restart plans and get an update on what’s

happening at the plant.

Even though some vessels have turned away from Freeport in recent weeks, including possibly the Prism Courage,

several tankers were still waiting in the Gulf of Mexico to pick up LNG from the plant, including Prism Agility (Jan.

2), Prism Brilliance (Jan. 26), Kmarin Diamond (Jan. 26) and Nohshu Maru (Jan. 31).

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Prism Courage, which had been sitting outside Freeport since early November, moved away from the plant and was now

listed as available “for orders,” according to Refinitiv ship tracking data.

Front-month gas futures for March delivery on the New York Mercantile Exchange were down 1 cent, or 0.4%,

to $2.400 per million British thermal units (mmBtu) at 9:11 a.m. EST (1411 GMT), putting the contract on track for its

lowest close since December 2020 for a second day in a row.

In the spot market, next-day gas for Monday at the Henry Hub benchmark in Louisiana dropped about

10% to $2.40 per mmBtu, its lowest since December

U.S. GAS OUTPUT

On a daily basis, gas production was on track to reach 96.1 billion cubic feet per day (bcfd) on Monday, up from a

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five-week low of 93.9 bcfd on Feb. 1 when extreme cold cut output by freezing oil and gas wells – known as freeze-offs

– in several states, including Texas, New Mexico, Oklahoma and Pennsylvania.

With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 127.1 bcfd this

week to 121.0 bcfd next week. The forecast for this week was higher than Refinitiv’s outlook on Friday, while its

forecast for next week was lower.

With the slow restart of Freeport, the average amount of gas flowing to U.S. LNG export plants rose to 12.8 bcfd

so far in February, up from 12.3 bcfd in January. That compares with the monthly record of 12.9 bcfd in March 2022

before Freeport shut.

Week ended Week ended Year ago Five-year

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Feb 3 Jan 27 Feb 3 average

(Forecast) (Actual) Feb 3

U.S. weekly natgas storage change (bcf): -185 -151 -228 -171

U.S. total natgas in storage (bcf): 2,398 2,583 2,133 2,249

U.S. total storage versus 5-year average 6.6% +6.7%

Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year

Last Year Average Average

2022 (2018-2022)

Henry Hub 2.42 2.41 4.46 6.54 3.60

Title Transfer Facility (TTF) 17.99 18.58 26.94 40.50 14.39

Japan Korea Marker (JKM) 18.53 18.37 25.82 34.11 14.31

Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days

Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year

Norm Norm

U.S. GFS HDDs 354 385 405 406 405

U.S. GFS CDDs 4 4 4 6 5

U.S. GFS TDDs 358 389 409 412 410

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Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Week Next Week This Week Five-Year

Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 96.0 95.7 95.8 91.7 87.7

U.S. Imports from Canada 8.4 8.4 7.9 10.2 9.1

U.S. LNG Imports 0.0 0.1 0.0 0.2 0.2

Total U.S. Supply 104.3 104.2 103.7 102.1 97.0

U.S. Demand (bcfd)

U.S. Exports to Canada 2.2 2.5 2.5 2.2 2.7

U.S. Exports to Mexico 5.1 5.1 5.3 6.0 5.2

U.S. LNG Exports 12.6 12.8 12.3 12.3 6.6

U.S. Commercial 18.4 16.1 14.4 19.4 16.4

U.S. Residential 31.5 26.7 23.4 33.3 27.7

U.S. Power Plant 33.5 31.5 31.2 29.6 28.1

U.S. Industrial 26.1 24.7 24.4 26.0 25.2

U.S. Plant Fuel 4.7 4.7 4.7 4.9 4.8

U.S. Pipe Distribution 3.1 2.8 2.7 2.9 3.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

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Total U.S. Consumption 117.5 106.6 101.0 116.2 105.4

Total U.S. Demand 137.4 127.1 121.0 136.7 119.9

U.S. weekly power generation percent by fuel – EIA

Week ended Week ended Week ended Week ended eek ended

Feb 10 Feb 3 Jan 27 Jan 20 Jan 13

Wind 16 10 11 13 11

Solar 2 2 2 2 2

Hydro 6 7 7 7 7

Other 2 2 2 2 2

Petroleum 1 0 0 0 0

Natural Gas 35 39 38 36 38

Coal 18 21 19 18 19

Nuclear 19 19 21 21 21

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)

Hub Current Day Prior Day

Henry Hub 2.40 2.67

Transco Z6 New York 4.51 22.19

PG&E Citygate 4.93 5.35

Eastern Gas (old Dominion South) 2.12 2.64

Chicago Citygate 2.42 2.85

Algonquin Citygate 11.00 26.06

SoCal Citygate 4.15 6.00

Waha Hub 1.49 2.24

AECO 2.00 2.24

SNL U.S. Power Next-Day Prices ($ per megawatt-hour)

Hub Current Day Prior Day

New England 215.75 237.25

PJM West 59.75 145.25

Ercot North 17.50 29.75

Mid C 48.50 52.43

Palo Verde 42.10 65.00

SP-5 39.00 66.00

(Reporting by Scott DiSavino

Editing by Mark Potter)