NEW YORK: US natural gas futures fell about 4% to a two-week low on Wednesday on forecasts for less cold weather and lower heating demand next week than previously expected, and on expectations Freeport LNG will delay the restart of its liquefied natural gas (LNG) export plant in Texas.
A few LNG vessels have turned away from Freeport over the past few days on expectations the plant’s restart will be delayed until December or later, according to ship tracking data from Refinitiv.
Federal pipeline safety regulators released a heavily redacted consultant’s report that blamed inadequate operating and testing procedures, human error and fatigue for the June 8 explosion that shut the Freeport plant.
Freeport had not yet submitted a request to resume service to the US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) as of earlier this week. Many analysts believe that means the plant will not return to service until December at the earliest.
Until late last week, Freeport had said repeatedly that the plant was still on track to return to service in November. The company, however, did not mention a November restart, or any restart date, in comments made over the past few days.
Once the 2.1 billion-cubic-feet-per-day (bcfd) Freeport facility restarts, US gas prices will likely rise due to increased demand from the country’s LNG export plants.
On the flip side, the delay in Freeport’s return means less gas is available for Europe to import, which has contributed to prices there spiking around 21% so far this week. Europe needs US gas because Russia slashed the amount of gas it usually exports after several European countries imposed sanctions to punish Moscow for its invasion of Ukraine.
A couple of vessels seem to have given up on a quick restart for Freeport. Prism Brilliance, which waited outside the plant for about three weeks from mid-October, was now waiting outside of Corpus Christi where Cheniere Energy Inc has an LNG export plant. LNG Rosenrot, which was expected to arrive at Freeport in late November, has since turned around in the Atlantic Ocean and was now heading toward Gibraltar, according to Refinitiv data.
Prism Agility still says it is on track for Freeport, but Refinitiv’s ship tracking map shows the vessel as turning east in the Atlantic Ocean.
There are still, however, a couple of vessels waiting outside Freeport: Prism Diversity and Prism Courage.
Front-month gas futures fell 24.9 cents, or 4.1%, to $5.785 per million British thermal units (mmBtu) at 9:23 a.m. EST (1423 GMT), putting it on track for its lowest close since Nov. 1.
Despite the decline, gas futures were still up about 58% so far this year as much higher global gas prices feed demand for US exports due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine.
Gas was trading at $36 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $27 at the Japan Korea Marker (JKM) in Asia.
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