U.S. natgas jumps 7% as partial return of Freeport LNG boosts exports

U.S. natgas jumps 7% as partial return of Freeport LNG boosts exports

14 Feb    Finance News, PMN Business, REU

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U.S. natural gas futures jumped about 7% to a one-week high on Tuesday from a near

25-month low in the prior session as the amount of gas going to liquefied natural gas (LNG) export plants jumped to

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a 10-month high with a rapid increase in gas flows to Freeport LNG’s export plant in Texas.

Prices also gained support from a decline in gas output this month and forecasts for colder weather and more

heating demand next week than previously expected.

Front-month gas futures for March delivery rose 16.2 cents, or 6.7%, to settle at $2.567 per million

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British thermal units (mmBtu), their highest since Feb. 7. On Monday, the contract fell to within a penny of closing

at the 25-month low hit on Feb. 8.

The amount of gas flowing to U.S. LNG export plants was on track to reach 13.5 billion cubic feet per day (bcfd)

on Tuesday, the highest since March 2022, as Freeport LNG pulled in more gas after restarting a liquefaction train

in test mode as it prepares to exit an eight-month outage caused by a fire in June 2022.

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Freeport LNG, the second-biggest U.S. LNG export plant, was on track to pull in 0.7 bcfd of feedgas on Tuesday,

up from 0.5 bcfd on Monday, according to data provider Refinitiv.

On Monday, Freeport LNG asked federal regulators for permission to put the first phase of its restart plan into

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commercial operation. Phase 1 includes the full operation of the plant’s three liquefaction trains, which turn gas

into LNG, two storage tanks and one LNG loading dock.

Federal regulators approved the restart of Train 3 but have not authorized the facility to commence liquefaction

operations. Freeport LNG still needs permission from regulators to place new LNG in the tanks and transfer it to

ships.

The LNG loaded onto ships over the past few days is old LNG that was already in the tanks. A second vessel,

SK E&S’s Prism Agility, left Freeport LNG with a load of fuel Tuesday morning, according to Refinitiv ship tracking

data. South Korea’s SK E&S is a customer of Freeport LNG.

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

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Energy regulators and analysts, however, have said they do not expect Freeport LNG to return to full commercial

operation until mid-March or later.

A couple of Freeport LNG’s customers – Japan’s JERA and Osaka Gas – have said they do

not expect to get LNG from the plant until after March.

U.S. GAS OUTPUT

Refinitiv said average gas output in the U.S. Lower 48 states fell from 98.3 bcfd in January to 97.0 bcfd so far

in February, after extreme cold earlier in the month froze oil and gas wells in several producing basins. That

compared with a monthly record of 99.8 bcfd in November 2022.

Meteorologists forecast the weather would remain mostly warmer than normal through March 1 except for some cold

days around Feb. 17-18 and Feb. 23-25.

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With three cold days expected next week versus just two this week, Refinitiv forecast U.S. gas demand, including

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exports, would rise from 118.3 bcfd this week to 123.2 bcfd next week. The forecast for this week was lower than

Refinitiv’s outlook on Monday, while its forecast for next week was higher.

With the amount of gas flowing to Freeport LNG rising, the average amount of feedgas going to all seven big U.S.

LNG export plants climbed to 12.8 bcfd so far in February from 12.3 bcfd in January. That compares with a monthly

record of 12.9 bcfd in March 2022 before Freeport LNG shut.

The seven big U.S. export plants, including Freeport LNG, can turn about 13.8 bcfd of gas into LNG.

Week ended Week ended Year ago Five-year

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Feb Feb 3 Feb 10 average

10(Forecast (Actual) Feb 10

)

U.S. weekly natgas storage change (bcf): -115 -217 -195 -166

U.S. total natgas in storage (bcf): 2,251 2,366 1,938 2,083

U.S. total storage versus 5-year average 8.10% 5.20%

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 2.50 2.41 4.46 6.54 3.60

Title Transfer Facility (TTF) 16.71 16.23 26.94 40.5 14.39

Japan Korea Marker (JKM) 17.90 17.99 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 367 358 417 386 380

U.S. GFS CDDs 7 6 9 7 6

U.S. GFS TDDs 374 364 416 393 386

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Refinitiv U.S. Weekly GFS Supply and Demand Forecasts

Prior Week Current Next Week This Week Five-Year

Week Last Year Average For

Month

U.S. Supply (bcfd)

U.S. Lower 48 Dry Production 96.9 98.3 98.5 94.6 87.7

U.S. Imports from Canada 8.4 8.0 8.4 9.8 9.1

U.S. LNG Imports 0.1 0.0 0.0 0.1 0.2

Total U.S. Supply 105.4 106.2 107.0 104.5 97

U.S. Demand (bcfd)

U.S. Exports to Canada 2.8 3.1 3.2 2.9 2.7

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U.S. Exports to Mexico 5.1 5.1 5.2 5.7 5.2

U.S. LNG Exports 12.6 13.1 12.5 13.0 6.6

U.S. Commercial 16.0 13.8 15.1 16.9 16.4

U.S. Residential 26.5 22.4 24.8 27.6 27.7

U.S. Power Plant 30.1 28.8 30.0 26.5 28.1

U.S. Industrial 24.7 24.2 24.6 25.3 25.2

U.S. Plant Fuel 4.8 4.9 4.9 4.9 4.8

U.S. Pipe Distribution 2.8 2.6 2.7 2.6 3.1

U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1

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Total U.S. Consumption 104.9 96.8 102.3 103.9 105.4

Total U.S. Demand 125.4 118.3 123.2 125.5 119.9

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

Week ended Week ended Week ended Week ended Week ended

Feb 17 Feb 10 Feb 3 Jan 27 Jan 20

Wind 12 15 10 11 13

Solar 3 3 2 2 2

Hydro 7 6 7 7 7

Other 2 2 2 2 2

Petroleum 0 0 0 0 0

Natural Gas 40 36 39 38 36

Coal 15 17 21 19 18

Nuclear 22 21 19 21 21

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

Hub Current Day Prior Day

Henry Hub 2.42 2.37

Transco Z6 New York 2.05 2.05

PG&E Citygate 6.00 5.72

Eastern Gas (old Dominion South) 1.94 1.91

Chicago Citygate 2.29 2.30

Algonquin Citygate 2.60 2.75

SoCal Citygate 6.25 6.00

Waha Hub 1.65 1.52

AECO 1.96 1.93

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

Hub Current Day Prior Day

New England 32.25 30.75

PJM West 24.00 27.25

Ercot North 14.50 25.50

Mid C 75.50 54.78

Palo Verde 48.25 44.75

SP-5 52.50 46.25

(Reporting by Scott DiSavino; Editing by Paul Simao and Chizu Nomiyama)

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