U.S. Natgas Futures Slide On Forecasts For Less Cold Weather – Reuters

Jan 4 (Reuters) – U.S. natural gas futures slid almost 3% on Tuesday after midday forecasts called for less cold weather and lower heating use over the next two weeks than previously expected.

That U.S. price decline came even though the market expects a 24% jump in European gas prices will keep demand for U.S. liquefied natural gas (LNG) exports strong.

In the last quarter of 2021, U.S. gas futures followed the rise and fall of global prices about two-thirds of the time as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia.

Front-month gas futures fell 9.8 cents, or 2.6%, to settle at $3.717 per million British thermal units (mmBtu).

More than 330,000 homes and businesses located mostly in Virginia were without power early Tuesday after a snow and ice storm battered the U.S. East Coast from Georgia to Maryland on Monday.

Although the snowstorm blew out to sea, cold weather blanketed the U.S. Northeast, causing next-day gas prices in New York City to soar from $3.60 per mmBtu for Monday to $8.50 for Tuesday.

That was the highest daily spot price in New York since last winter’s February freeze cut power and gas supplies in Texas and boosted energy costs to record highs in several parts of the country.

Even though gas prices in Europe dropped by about half since hitting an all-time high near $60 per mmBtu in late December, global prices continue to trade around eight times higher than gas in the United States.

U.S. futures followed that global gas price spike, reaching a 12-year high of more than $6 per mmBtu in early October, but have since retreated because the United States has plenty of gas in storage and ample production for the winter.

Analysts have said European gas inventories were about 20% below normal for this time of year, compared with about 1% above normal in the United States.

Data provider Refinitiv said well freeze-offs in several states — including Texas, New Mexico and North Dakota — earlier this week caused gas output in the U.S. Lower 48 states to drop to an average of 94.5 billion cubic feet per day (bcfd) so far in January, versus a record 97.6 bcfd in December. read more

With the weather expected to remain colder than normal through mid-January, Refinitiv projected average U.S. gas demand, including exports, would rise from 128.4 bcfd this week to 134.3 bcfd next week as homes and businesses crank up their heaters.

The amount of gas flowing to U.S. LNG export plants eased to an average of 12.0 bcfd so far in January from a record 12.2 bcfd in December.

With gas prices around $32 per mmBtu in Europe and $31 in Asia , compared with just about $4 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States can produce.

But no matter how high global gas prices rise, the United States only has the capacity to turn about 12.2 bcfd of gas into LNG.

Reporting by Scott DiSavino; Editing by Jan Harvey and Jonathan Oatis

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