Natural Gas Price Spike - Feb 13

[dan_s]

The front month US natural gas futures contract (APR26) spiked above $3.76/MMBtu this morning, the highest in three weeks, driven by rising LNG exports, lower output, and colder weather forecasts.
> Gas flows to the eight major U.S. LNG export plants averaged 15.3 bcfd so far in February, up from 14.6 bcfd in January, nearing record levels. On Thursday, daily LNG feedgas was set to hit 15.9 bcfd, surpassing the previous high of 15.8 bcfd on January 18.
> Meanwhile, extreme cold froze some wells, causing daily gas output to drop by 3.7 bcfd over the past week to a two-week low of 103.0 bcfd.
> Looking ahead, weather forecasts indicate colder-than-normal temperatures through February 22, boosting heating demand.
> Additionally, the EIA reported that US utilities withdrew 100 bcf of natural gas from storage in the week ending February 7, reducing total inventories to 2,297 bcf, more than the expected 92 bcf draw.

When the front month futures contracts spike up in the morning, it is normally short covering. This time it is fueled by a weather forecast that seems to get colder each day. Draws from storage during the two weeks ending February 21 will be much larger than the 5-year average. Also, note that LNG exports keep ramping up as the two newest LNG export facilities (Venture Global's at Plaquemines, Louisiana and Cheniere's Train 3 at Corpus Christi, Texas) ramp up combined design capacity of 3.3 Bcfpd. Total U.S. LNG export capacity will soon be 17.8 Bcfpd.

Europe's also had a cold winter (great news for those of you fearful of Global Warming) and natural gas prices in Europe are now about $17.00/MMBtu. Quit bitching about your utility bills.