U.S. LNG Exports Remain Flat As Market Braces For Cold Season

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Credits: Chris Pagan/ Unsplash
  • U.S. natural gas futures’ implied volatility, a measure of the likely movement in prices, hit a record last week on the outlook for colder weather.
  • Freeport LNG provides around 20% of the U.S. LNG processing.
  • U.S. LNG producers sent more LNG to Europe, directing 72% of total cargoes to European customers compared with 20% to Asia.

U.S. liquefied natural gas exports were flat last month, Refinitiv shipping data showed on Thursday, as production remained limited and the arrival of winter weather in the Northern Hemisphere led utilities to build inventories for domestic use.

LNG price hit

U.S. natural gas futures’ implied volatility, a measure of the likely movement in prices, hit a record last week on the outlook for colder weather and doubts about the restart of the Freeport LNG plant in Texas this month. The plant has been idled since a June explosion.

Freeport LNG, which provides around 20% of the U.S. LNG processing, has said it aims to resume gas processing in mid-December depending on regulatory approvals. Analysts have said it could be early 2023 before shipments resume.

LNG producers

In November, U.S. producers shipped a total of 88 cargoes carrying 6.31 million tonnes of LNG, almost unchanged from the 6.28 million tonnes of the previous month, according to preliminary figures.

U.S. LNG producers sent more LNG to Europe, directing 72% of total cargoes to European customers compared with 20% to Asia. In October, 59% of U.S. LNG cargoes sailed to Europe and 24% to Asia.

Mild supply growth

“The market is going into the heating season with what appears to be sufficient storage, having built to 3.64 trillion cubic feet,” said Ade Allen from Rystad Energy in a note to clients this week. “However, market participants can’t get complacent yet as mother nature is the ultimate unknown.”

On the U.S. gas output side, supply showed a modest uptick last week as supply from Appalachia rose after being tepid all year and volumes in Permian and Haynesville shale fields were strong.

Concerns remain that a lack of robust supply growth could bring imbalances, especially for the spring of 2023, and that external risks such as a rail workers strike could push prices higher.

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Source: Reuters

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