US natgas futures little changed ahead of storage report

NEW YORK: US natural gas futures were little changed on Thursday as the market waited for direction from a federal report expected to show last week’s storage withdrawal was smaller than usual because the weather then was still warmer than normal and heating demand was low.

That lack of price movement came despite bearish forecasts for less cold weather and lower heating demand in late December than previously expected.

That lack of price movement also came despite a bullish increase in gas flows to liquefied natural gas (LNG) export plants to their highest since before the Freeport LNG export plant shut in June and a drop in gas output to a two-month low as extreme cold from North Dakota to Texas caused oil and gas wells to freeze.

Analysts forecast US utilities pulled 45 billion cubic feet (bcf) of gas from storage during the week ended Dec. 9. That compares with a decrease of 83 bcf in the same week last year and a five-year (2017-2021) average decline of 93 bcf.

If correct, last week’s decrease would cut stockpiles to 3.417 trillion cubic feet (tcf), or 0.3% below the five-year average of 3.427 tcf for this time of year.

Traders said the biggest uncertainty for the market remains when Freeport LNG will restart its LNG export plant in Texas.

After several delays, the company has said it was on track to restart the plant by the end of the year. Many analysts, however, have said they do not expect Freeport to return until the first quarter of 2023 because the company still has a lot of work to do to satisfy federal regulators before the plant is ready to restart.

Once Freeport returns, demand for gas will jump. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG.

Freeport shut on June 8 due to an explosion caused by inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired to review the incident and suggest corrective actions.

A couple of vessels - Prism Diversity and Prism Courage - have been waiting in the Gulf of Mexico to pick up LNG from Freeport since at least early November.

There are also several other ships sailing toward the plant, including Elisa Larus, which is expected to arrive in late December, Point Fortin and Prism Agility (early January) and Wilforce (late January).