U.S. natural gas futures plunged about 8% to an 18-month low on Friday on growing expectations the Freeport liquefied natural gas (LNG) export plant in Texas will remain shut until February or later and on forecasts the weather will turn mild again in February following a late January freeze.
RSI
“Sellers are back in the proverbial driver’s seat,” analysts at energy consulting firm Gelber & Associates said in a note, pointing to a healthy amount of gas in storage, the expected delayed restart for Freeport LNG and forecasts for more mild weather in February. Front-month gas futures for February delivery fell 27.6 cents, or 7.5%, to settle at $3.419 per million British thermal units (mmBtu), their lowest close since June 24, 2021. That kept the front-month in technically oversold territory with a relative strength index (RSI) below 30 for a fourth day in a row and an 11th time in the last 12 days. For the week, the contract was down about 8%, putting it down for a fourth week in a row for the first time since October. During the prior three weeks, the contract lost about 44%. The premium on March futures over April , which the industry calls the widow maker, slid to a record low of 4 cents per mmBtu as some market participants give up hope that extreme cold will bring a price spike later this winter. The industry uses the March-April spread to bet on the winter heating season when demand for gas peaks. It calls the spread the “widow maker” because rapid price moves resulting from changing weather forecasts have forced some speculators out of business. Among them was the Amaranth hedge fund, which lost more than $6 billion on gas futures in 2006. Traders said the biggest market uncertainty remains the restart date for Freeport LNG’s export plant in Texas. At least two LNG vessels gave up on Freeport this week after sources said the company would extend the plant’s seven-month outage until February or later, ship tracking data from Refinitiv showed. After several delays from October to November and then to December, Freeport said again this week that the plant was on track to return in the second half of January, pending regulatory approvals. Despite Freeport’s sliding timeline, analysts have long said it would likely take until the first or second quarter of 2023 to restart the plant due to the large amount of work needed to satisfy federal regulators, including training staff in new safety procedures. Whenever Freeport returns, U.S. gas demand will jump. The plant can turn about 2.1 billion cubic feet per day s(bcfd) of gas into LNG, which is about 2% of U.S. daily production. Freeport has filed reports with federal regulators about what it is doing to return the plant but has kept those filings confidential for competitive reasons. A growing number of local and environmental groups, however, have asked regulators in recent weeks to make those filings public so they can comment on whether they think Freeport is doing enough to safely restart the plant. Even though some vessels have turned away from Freeport, several tankers, including Prism Diversity, Prism Courage and Prism Agility, were still waiting in the Gulf of Mexico to pick up LNG from Freeport. Some have been there since early November. Other ships, meanwhile, were still sailing toward Freeport, including Prism Brilliance, Kmarin Diamond and Wilforce, and are expected to reach the plant in late January. Refinitiv projected average U.S. gas demand, including exports, would ease from 120.8 bcfd this week to 119.7 bcfd next week as the weather turns milder before rising to 125.1 bcfd in two weeks when the weather turns colder. Week ended Week ended Year ago Five-year Jan 13 Jan 6 Jan 13 average (Forecast) (Actual) Jan 13 U.S. weekly natgas storage change (bcf): -74 +11 -156 -203 U.S. total natgas in storage (bcf): 2,828 2,902 2,839 2,786 U.S. total storage versus 5-year average +1.5% -1.4% 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 3.56 3.70 4.26 6.54 3.60 Title Transfer Facility (TTF) 20.42 21.41 28.25 40.50 14.39 Japan Korea Marker (JKM) 26.76 26.87 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 376 383 497 440 446 U.S. GFS CDDs 4 2 1 3 3 U.S. GFS TDDs 380 385 498 443 449 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 98.5 98.6 98.7 94.3 88.8 U.S. Imports from Canada 7.8 8.6 8.8 10.0 9.4 U.S. LNG Imports 0.0 0.0 0.0 0.1 0.4 Total U.S. Supply 106.3 107.2 107.5 104.4 98.6 U.S. Demand (bcfd) U.S. Exports to Canada 3.2 2.7 2.8 2.8 2.8 U.S. Exports to Mexico 4.9 5.3 5.2 5.8 5.3 U.S. LNG Exports 11.8 12.3 12.5 12.5 7.2 U.S. Commercial 12.6 14.7 14.5 18.1 17.1 U.S. Residential 20.0 23.6 23.7 30.3 29.8 U.S. Power Plant 27.3 29.6 28.9 29.2 28.5 U.S. Industrial 23.7 24.5 24.5 25.4 25.6 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.4 2.7 2.6 2.7 2.4 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 91.1 100.4 99.2 110.7 108.4 Total U.S. Demand 111.0 120.8 119.7 131.8 123.7 U.S. weekly power generation percent by fuel – EIA Week ended Week ended Week ended Week ended Week ended Jan 13 Jan 6 Dec 30 Dec 23 Dec 16 Wind 10 12 11 9 12 Solar 2 2 2 2 2 Hydro 7 7 6 6 6 Other 2 2 2 2 2 Petroleum 0 0 0 0 0 Natural Gas 38 36 35 37 37 Coal 19 18 23 24 20 Nuclear 21 23 19 19 20 SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) Hub Current Day Prior Day Henry Hub 3.47 3.41 Transco Z6 New York 3.15 2.70 PG&E Citygate 26.49 18.90 Dominion South 2.95 2.48 Chicago Citygate 3.50 3.15 Algonquin Citygate 3.67 3.42 SoCal Citygate 25.00 18.10 Waha Hub 2.89 2.35 AECO 3.06 2.85 SNL U.S. Power Next-Day Prices ($ per megawatt-hour) Hub Current Day Prior Day New England 42.50 58.00 PJM West 47.25 38.00 Ercot North 34.00 27.50 Mid C 130.33 Palo Verde 137.25 SP-5 143.00 (Reporting by Scott DiSavino in New York and Rahul Paswan in Bengaluru; Editing by Marguerita Choy and Hugh Lawson)
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Source: Yahoo Finance
