Gas futures increased by 3% in the U.S. as weather forecasts get worse

On Wednesday, a 3% increase in U.S. natural gas futures was registered, which was enough to cover some earlier losses. The increase is linked to a fact that colder weather forecasts turned out to be more significant than news about some LNG (liquefied natural gas) vessels turning away from Texas Freeport export plant. It’s suggested that the plant’s restart won’t happen soon.

A heavily redacted consultant’s report mentioning the main reasons of the June 8 explosion as the Freeport plant was recently published by the U.S. pipeline safety regulators. The explosion that led to the plant’s closure was caused by inappropriate operating procedures, inadequate testing and human factor, as was stated in the report. According to sources familiar with the situation, no request to resume service has been submitted yet to the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA). Specialists consider is to be a signal that the plant won’t be fully operating again until December at least. 

The Freeport plant’s representatives had previously announced the restart to take place in November. Although in their most recent statements, the organization didn’t mention any precise dates. It’s expected that after Freeport LNG returns to its normal 2.1 billion-cubic-feet-per-day production volumes, gas prices in the U.S. will go up due to larger export demand.

Still, a number of LNG vessels don’t expect the Freeport plant to come back into operation soon. One of such vessels had been in waiting for three weeks near the plant, and then left the place. According to Refinitiv, another two vessels have turned east in the Atlantic, although their initial destination point was Freeport. At the same time, two more vessels are still waiting near the plant.

As it was shown in the data provided by Refinitiv, the average amount of gas input in the U.S. turned out to be lower this month, reaching the level of 99.2 billion-cubic-feet-per-day, while in November it hit a record of 99.4 bcfd. Refinitiv forecasts future gas demand to grow because the weather is getting cooler. The expected demand, with exports included, would rise from this week’s 122.6 bcfd to next week’s 126.6 bcfd. 

The previous Refinitiv forecast showed larger figures for this week and lower for the next one. Concerning the average amount of gas supplies to U.S. LNG export plants, in November it has increased to the level of 11.8 bcfd, while it was 11.3 bcfd last month.