U.S. natural gas futures fell about 3% on Feb. 13 on rising output and forecasts for milder weather and less heating demand over the next two weeks than previously expected.
That price decline came even though LNG exports jumped to their highest since May 2022 after a vessel picked up a cargo from Freeport LNG's long-idled export plant in Texas and the facility started pulling in more pipeline gas to cooldown one of its three liquefaction trains.
Front-month gas futures for March delivery fell 7 cents, or 2.8%, to $2.444/MMBtu at 11:30 a.m. EST. On Feb. 8, the contract closed at a 25-month low of $2.396.
Freeport, the second biggest U.S. LNG export plant, shut in a fire in June 2022. Gas flows to the plant were on track to reach 0.5 Bcf/d on Feb. 13, up from an average of 43 MMcf/d since Jan. 26 when federal regulators approved the company's plan to start cooling parts of the plant.
That is still only a fraction of the roughly 2.1 Bcf/d of gas Freeport can pull in to make LNG when operating at full power. Energy regulators and analysts have said Freeport will likely not return to full capacity until mid March or later.
A couple of Freeport's customers - Japan's JERA and Osaka Gas - have said they do not expect to get LNG from the plant until after March.
With the amount of gas flowing to Freeport rising the average amount of feedgas going to U.S. LNG export plants climbed to 12.7 Bcf/d so far in February, up from 12.3 Bcf/d in January. That compares with a monthly record of 12.9 Bcf/d in March 2022 before Freeport shut.
On a daily basis, however, LNG feedgas was on track to reach 13.3 Bcf/d on Feb. 13, the most in a day since May 2022 before Freeport shut in June 2022.
The seven big U.S. export plants, including Freeport, can turn about 13.8 Bcf/d of gas into LNG.
U.S. gas output
Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 97 Bcf/d so far in February, down from 98.3 Bcf/d in January. That compares with a monthly record of 99.8 Bcf/d in November 2022.
On a daily basis, however, production hit a two-week high of 98.6 Bcf/d on Feb. 11 as oil and gas wells return to service after freezing earlier in the month in several states, including Texas, New Mexico, Oklahoma and Pennsylvania. The energy industry calls output declines from freezing wells freeze-offs.
Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 28 except for a few cold days around Feb. 17-18 and Feb. 23-25.
With three cold days expected next week versus just two this week, Refinitiv forecast U.S. gas demand, including exports, would rise from 119.2 Bcf/d this week to 122.6 Bcf/d next week. Those forecasts were lower than Refinitiv's outlook on Feb. 10.
Energy analysts, however, noted that colder than normal weather in late February does not boost heating demand by as much as cold in late January. The 30-year average temperature in the U.S. Lower 48 states is about 37 F (3 C) on Jan. 25 versus 42 F on Feb. 25, according to data provider Refinitiv.
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