US Natural Gas Futures Pare Gains on Texas Freeport LNG Delay Rumors

(Reuters) — U.S. natural gas futures pared earlier gains on Monday from up over 8% to up just 3% on unconfirmed rumors that Freeport LNG delayed the restart of its liquefied natural gas export plant in Texas from November to December.

Traders noted prices were up much higher earlier in the day due to forecasts for colder weather than previously expected and for higher heating demand through the end of November.

Freeport LNG has said repeatedly that the plant, which shut after an explosion on June 8, would return in November. Officials at Freeport were not immediately available for comment.

On Friday, the market dropped more than 5% due in part to what Freeport LNG called fake tweets about cracked pipes at the plant. Some traders said they called on the Commodities Futures Trading Commission (CFTC) to investigate the tweets.

"Any Tweets and/or posts on Freeport LNG branded letterhead that may have been obtained or published, are reporting false information and are not legitimate, official public information from Freeport LNG," Freeport said on Friday.

Front-month gas futures <NGc1> rose 14.4 cents, or 2.5%, to $6.023 per million British thermal units (MMBtu) at 1:20 p.m. EST (1820 GMT). Earlier in the session the contract was up over 8%.

Rapid price changes over the past couple of weeks - futures gained or lost more than 5% on eight of the past 10 days - boosted the contract's 30-day implied volatility index <NGATMIV> to its highest level since hitting a record in October 2021. The market uses implied volatility to estimate likely price changes in the future.

Freeport Delays

Sources familiar with Freeport LNG's filings with federal safety regulators told Reuters on Monday that Freeport has not yet submitted a request to resume service to the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA).

Analysts at investment bank Goldman Sachs, energy consulting firm Gelber & Associates and others have said that lack of a request to resume service likely means the 2.1 billion-cubic-feet-per-day (Bcf/d) Freeport export plant will not return until December.

A couple of vessels were waiting to pick up LNG from Freeport, according to Refinitiv data. Prism Diversity and Prism Courage were offshore from the plant, while LNG Rosenrot and Prism Agility were expected to arrive in late November.

But one vessel, Prism Brilliance, which had been waiting outside the Freeport plant, is now waiting outside Corpus Christi in Texas where Cheniere Energy Inc <LNG.A> has an LNG export plant, according to Refinitiv data.

Gas Prices

Gas futures are up about 66% so far this year as much higher global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine.

Gas was trading at $32 per MMBtu at the Dutch Title Transfer Facility (TTF) in Europe <TRNLTTFMc1> and $27 at the Japan Korea Marker (JKM) in Asia <JKMc1>.

Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 99.0 Bcf/d so far in November, down from a record 99.4 Bcf/d in October.

With the much colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would jump from 121.7 Bcf/d this week to 126.8 Bcf/d next week. Those forecasts were higher than Refinitiv's outlook on Friday.

The average amount of gas flowing to U.S. LNG export plants rose to 11.6 Bcf/d so far in November, up from 11.3 Bcf/d in October.

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