U.S. natgas futures rise 3% on soaring European prices

  • 12/8/2021
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Dec 8 (Reuters) - U.S. natural gas futures rose about 3% on Wednesday on forecasts for more heating demand this week than previously expected and as the U.S. market followed an 8% jump in European gas prices that should keep U.S. liquefied natural gas (LNG) exports near record highs. Traders said that increase in U.S. prices occurred despite forecasts for milder U.S. weather and lower heating demand next week than previously expected. Many analysts expect the mild weather will allow U.S. utilities to leave enough gas in storage to allow stockpiles to reach above normal levels by mid-December. Front-month gas futures rose 10.7 cents, or 2.9%, to settle at $3.815 per million British thermal units (mmBtu). In the spot market, next-day power prices hit their highest since June, with the weather in New England turning seasonally colder, while gas prices for Wednesday jumped to their highest since the February freeze knocked out power and gas supplies in Texas and other U.S. Central states. In recent months, global gas prices hit record highs as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China. Following those global gas prices, U.S. futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter. Overseas prices were currently trading about nine times higher than U.S. futures. Analysts have said European inventories were about 17% below normal for this time of year, compared with just 2% below normal in the United States. Data provider Refinitiv said output in the U.S. Lower 48 states has averaged 96.3 billion cubic feet per day (bcfd) so far in December, down from a monthly record of 96.5 bcfd in November. With an unusual warming of the weather expected later in December, Refinitiv projected average U.S. gas demand, including exports, would drop from 115.5 bcfd this week to 108.5 bcfd next week. The forecast for this week was higher than Refinitiv"s outlook on Tuesday, while the forecast for next week was lower. The amount of gas flowing to U.S. LNG export plants has averaged 11.8 bcfd so far in December now that the sixth train at Cheniere Energy Inc"s (LNG.A) Sabine Pass plant in Louisiana is producing LNG. That compares to 11.4 bcfd in November and a monthly record of 11.5 bcfd in April. With gas prices around $33 per mmBtu in Europe and $35 in Asia , compared with about $4 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States can produce. But no matter how high global gas prices rise, the United States only has the capacity to turn about 11.1 bcfd of gas into LNG. The rest of the gas flowing to the export plants is used to fuel equipment that produces the LNG. Global markets will have to wait until later this year to get more when Venture Global LNG"s Calcasieu Pass in Louisiana starts producing LNG in test mode. read more

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