U.S. gas prices up 2% due to cold weather forecasts

U.S. natural gas futures were up about 2% Tuesday due to an expected colder weather and increased heating demand by next week. Nevertheless, a possible postponement of Freeport LNG's launch date would cloud the outlook quite noticeably.

The U.S. liquefied natural gas exporter has not yet filed a request to resume service with the Pipeline and Hazardous Materials Safety Administration (PHMSA). According to analysts, that could mean the plant won't be back in operation anytime soon — at least no earlier than December.

By the end of last week, Freeport had repeatedly stated that the plant, which closed after the June 8 explosion, should return to operation in November. However, neither Friday nor Monday did the company mention in a commentary an imminent restart date.

Ade Allen, an analyst at Rystad Energy said speculation on a Freeport restart date is a losing game. Nevertheless, restarting production by the end of the year could provide the increase in demand that market participants are expecting. They expect this to lead to higher prices.

Once the 2.1 billion cubic feet per day Freeport plant returns to production, U.S. gas prices should rise due to increased demand from exports. According to Refinitiv, several ships are waiting to pick up LNG from Freeport. A couple of ships are already at sea near the plant, and two more were expected to arrive in late November.

As the U.S. is considered the world's largest producer of a fuel surplus for domestic consumption, its gas futures have lagged behind global prices. That said, however, the United States has had to ship less natural gas for export recently because of capacity constraints, especially with the shutdown of the Freeport plant.