US natural gas price retreat continues, Freeport delay adds to slump
Quantum Commodity Intelligence - Benchmark US natural gas prices continued to trade at around one-year lows Friday as mild winter slashed demand, while another potential delay to exports from the Freeport LNG terminal in Texas added to the January price slump.
The front-month Feb23 Henry Hub contract on NYMEX was trading around 3% lower late morning eastern time at $3.58/mmBtu, with the contract having retreated nearly 50% over the last month.
Natural gas prices have been hit by mild winter temperatures since the start of the year, including Houston on course for one of the warmest January's on record with an average temperature for the first 10 days at 64.4 degrees F.
National temperatures are set to fall over the weekend, but having little impact so far on gas prices amid high inventories.
Uncertainty on the timeline for a restart of exports from the Freeport terminal also weighed on prices, leaving additional natural gas volumes trapped in the US.
"Natural gas is trying to recover but got another blow when it was reported that the Freeport LNG export terminal restart date is being pushed even further back," said Phil Flynn of The Price Futures Group, adding talk suggests that Freeport may not reopen until February and "there are even some people speculating that it might not happen until this summer".
Forecast
Meanwhile, the US Energy Information Administration (EIA) cut its price forecast this week, saying Henry Hub spot prices will average $4.90/mmBtu in 2023, down from $6.42/MMBtu in 2022.
In its January Short-Term Energy Outlook, the EIA also lowered its first quarter 2023 forecast for prices by $1.18 to $4.99/mmBtu, while Q2 was cut by $0.25 to $4.75/mmBtu.
"The natural gas market is particularly uncertain, but we expect that US natural gas production will establish new record highs in both 2023 and 2024, leading to lower domestic prices," said EIA administrator Joe DeCarolis.
The EIA hiked its production forecast for 2023 by 2.36 Bcf/d to 109.11 Bcf/d on average and estimated production will grow further to average 111.24 Bcf/d in 2024.
"Increases in US natural gas production, relatively flat LNG exports, and declining domestic consumption in the electric power and industrial sectors will limit upward pressure on prices in 2023," concluded the report.
