HomeNewsU.S. natgas prices slip 2% from 13-month high on rising output

U.S. natgas prices slip 2% from 13-month high on rising output

12/13/2024
  • Gas flows to Venture Global Plaquemines in Louisiana high enough to produce first LNG
  • Feedgas to LNG export plants on track to reach 11-month high
  • Gas futures closed at 13-month high on Thursday

U.S. natural gas futures fell about 2% on Friday from a 13-month high reached in the prior session on increased supplies as producers keep pulling more gas out of the ground in anticipation of rising demand from cold winter weather and higher gas flows to liquefied natural gas (LNG) export plants.

Friday's price decline came even as the amount of gas flowing to LNG export plants was on track to reach an 11-month high as Venture Global LNG's Plaquemines plant under construction in Louisiana likely started pulling in enough fuel to produce first LNG.

Front-month gas futures for January delivery on the New York Mercantile Exchange fell 6.1 cents, or 1.8%, to $3.394 per million British thermal units (MMBtu). On Thursday, the contract closed at its highest since November 2023.

For the week, the front-month was up about 11% after falling about 9% last week.

Despite this week's price increase, some analysts have said that winter, and the high prices it usually brings, could be over before the season officially starts now that the heavily traded March-April "widow maker" spread was trading in unusual contango. That means the April contract is priced higher than the March contract.

March is the last month of the winter storage withdrawal season, and April is the first month of the summer storage injection season. Because gas is primarily a winter heating fuel, summer prices typically do not trade above winter ones.

It is also possible that gas prices already hit their 2024 peak in November when they reached an intraday high of $3.56 per MMBtu. Over the past five years, prices hit their yearly highs in January 2023, August 2022, October 2021 and 2020, and January 2019.

In the spot market, meanwhile, gas prices at the Southern California Gas hub rose to their highest since January.

Supply and demand. Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 102.9 Bft3d so far in December, up from 101.5 Bft3d in November. That compares with a record 105.3 Bft3d in December 2023.

Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through Dec. 28, except for a few colder-than-normal days from Dec. 21-23.

LSEG forecast average gas demand in the Lower 48, including exports, would drop from 129.4 Bft3d this week to 125.0 Bft3d next week before rising to 136.4 Bft3d in two weeks. The forecasts for this week and next were higher than LSEG's outlook on Thursday.

The amount of gas flowing to the eight big LNG export plants operating in the U.S. rose to an average of 14.1 Bft3d so far in December, up from 13.6 Bft3d in November. That compares with a monthly record high of 14.7 Bft3d in December 2023.

On a daily basis, LNG feedgas was on track to rise to an 11-month high of 14.9 Bft3d on Friday, up from 13.6 Bft3d on Thursday, with flows to Cheniere Energy's 4.5- Bft3d Sabine in Louisiana rising to a 13-month high and flows to the first 1.8-Bft3d phase of Venture Global's Plaquemineslikely rising enough for the plant to produce first LNG.

 

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