U.S. natgas drops 6% on milder forecasts, lengthy Freeport restart
Jan 24 (Reuters) - U.S. natural gas futures dropped about 6% on Tuesday on uncertainty about when Freeport
LNG's liquefied natural gas (LNG) export plant in Texas would restart and on forecasts for milder weather and lower
heating demand over the next two weeks than previously expected.
Although Freeport LNG said that its export plant was ready to begin restarting, analysts said it will still take
time for the facility to exit its seven-month outage and start pulling significant gas from the nation's pipelines.
Freeport LNG, the second-largest U.S. LNG exporter, said on Monday that it had completed repairs to its plant and
asked U.S. regulators for permission to take early steps to restart the fire-idled facility.
Those steps involve cooling certain pipes - a process Freeport said would take around 11 days - after regulators'
approval. After that, Freeport said it would seek permission to start the liquefaction trains that turn gas into LNG.
Freeport's request meets the company's last estimate in December that the plant would be commence restart
activities in the second half of January, pending regulatory approvals. That would also put it on track to meet some
sources' forecast for production to restart in February or later.
After a series of delays by the company from October to January, analysts have said Freeport might need until the
second quarter to resume due to the large amount of work needed to satisfy federal regulators.
Freeport is important because the market expects gas prices and demand to rise once large amounts of pipeline gas
start flowing to the plant. The facility, which shut in a fire on June 8, 2022, can turn about 2.1 billion cubic feet
per day (bcfd) of natural gas when operating at full power. That is about 2% of U.S. daily natural gas production.
The latest weather forecast projected on Tuesday that there would be 380 heating degree days over the next two
weeks, which was down from the 390 HDDs in Monday's outlook. HDDs, used to estimate demand to heat homes and
businesses, measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees
Celsius).
Front-month gas futures for February delivery fell 18.9 cents, or 5.5%, to settle at $3.258 per million
British thermal units (mmBtu), their lowest since closing at a 19-month low of $3.174 on Friday, Jan. 20.
U.S. GAS OUTPUT
Data provider Refinitiv said that average gas output in the U.S. Lower 48 states has risen to 98.7 bcfd so far in
January, up from 96.7 bcfd in December. That compares with a monthly record of 99.9 bcfd in November 2022.
On a daily basis, however, output was on track to drop about 1.7 bcfd to a preliminary three-week low of 97.4 bcfd
on Tuesday as cold weather starts to cause wells to freeze - known as freeze-offs in the energy industry - in some
producing basins like the Bakken in North Dakota, the Rockies in Colorado, the Permian in Texas and Appalachia in
Pennsylvania.
With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would jump from 130.1 bcfd this
week to 139.0 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Monday.
Week ended Week ended Year ago Five-year
Jan 20 Jan 13 Jan 20 average
(Forecast) (Actual) Jan 20
U.S. weekly natgas storage change (bcf): -78 +82 -217 -185
U.S. total natgas in storage (bcf): 2,742 2,820 2,622 2,601
U.S. total storage versus 5-year average +5.4% +1.2%
Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year
Last Year Average Average
2022 (2018-2022)
Henry Hub 3.59 3.45 4.26 6.54 3.60
Title Transfer Facility (TTF) 19.00 21.31 28.25 40.50 14.39
Japan Korea Marker (JKM) 23.26 22.82 28.53 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 480 490 508 430 435
U.S. GFS CDDs 3 3 2 4 3
U.S. GFS TDDs 483 493 510 434 438
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 98.9 98.9 99.3 93.5 88.8
U.S. Imports from Canada 8.4 8.4 9.3 10.2 9.4
U.S. LNG Imports 0.0 0.0 0.0 0.2 0.4
Total U.S. Supply 107.3 107.3 108.6 103.9 98.6
U.S. Demand (bcfd)
U.S. Exports to Canada 2.8 2.6 2.6 2.5 2.8
U.S. Exports to Mexico 5.3 5.3 5.2 6.0 5.3
U.S. LNG Exports 12.4 12.2 11.8 12.6 7.2
U.S. Commercial 14.8 16.5 19.1 20.4 17.1
U.S. Residential 24.5 27.8 32.5 35.0 29.8
U.S. Power Plant 29.5 32.0 32.9 32.3 28.5
U.S. Industrial 24.6 25.6 26.6 26.6 25.6
U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9
U.S. Pipe Distribution 2.7 2.9 3.2 2.9 2.4
U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1
Total U.S. Consumption 101.1 110.0 119.4 122.2 108.4
Total U.S. Demand 121.6 130.1 139.0 143.3 123.7
U.S. weekly power generation percent by fuel - EIA
Week ended Week ended Week ended Week ended Week ended
Jan 27 Jan 20 Jan 13 Jan 6 Dec 30
Wind 8 13 11 12 11
Solar 2 2 2 2 2
Hydro 7 7 7 7 6
Other 2 2 2 2 2
Petroleum 0 0 0 0 0
Natural Gas 40 36 38 36 35
Coal 19 18 19 18 23
Nuclear 22 21 21 23 19
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub Current Day Prior Day
Henry Hub 3.43 3.15
Transco Z6 New York 3.26 3.30
PG&E Citygate 15.71 14.93
Eastern Gas (old Dominion South) 2.71 2.66
Chicago Citygate 3.20 3.06
Algonquin Citygate 3.36 3.89
SoCal Citygate 16.81 14.76
Waha Hub 2.74 0.51
AECO 2.80 2.80
SNL U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub Current Day Prior Day
New England 47.25 39.75
PJM West 45.50 38.50
Ercot North 35.50 21.50
Mid C 157.75 135.00
Palo Verde 135.50 100.00
SP-5 142.00 125.00
(Reporting by Scott DiSavino; Editing by Paul Simao and Cynthia Osterman)
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