Natural Gas "Bidding War"

[dan_s]

Trading Economics:
U.S. Natural Gas price
US natural gas futures rose more than 8% above $4.45/MMBtu, the highest since December 2022, driven by record LNG export flows and stronger demand forecasts. < As you can see on page 3 of today's newsletter, in August 2022 the HH NGas front month contract SEP22 rose to $9.30.
> LNG exports are rising at the start of March, after hitting a fresh record 15.6 bcfd in February, boosted by new units at Venture Global’s Plaquemines plant. > Also on page 3 of the newsletter. U.S. total LNG export capacity is now 17.8 Bcf per day, so export records should be broken month after month until we get to that level. When Golden Pass Train One is online in Q4 2025, U.S. export capacity will be 18.5 Bcf per day.
> Despite milder weather expected through March 18, gas demand in the Lower 48 states is projected to be higher than previously anticipated, falling from 119.3 bcfd this week to 114.7 bcfd next week.
> Also, stockpiles remain about 12% below the five-year average due to earlier extreme cold.
> Meanwhile, gas output hit a fresh record of 104.7 bcfd in February.

We are now in "Stage One" of the Bidding War for physical supplies of natural gas.
> There is no actual shortage of natural gas in the U.S., but the LNG exporters and the utilities are now taking long positions in the futures market, so they have enough gas when the real shortage arrives in Q3.
> It is now clear to the Paper Traders that refilling U.S. natural gas storage before the next winter heating season begins in November will be difficult if not impossible. Plus, the Western Canadian upstream companies know this too. They may be sending their gas to storage instead of paying tariffs now and just wait until U.S. natural gas approaches $10 before they send it south.

Keep in mind that refilling storage before mid-November is not "optional". Utilities are required by law to have sufficient volumes of gas in storage to meet space heating demand in the areas they serve. The penalties for not doing it are steep. Plus, they will just pass the higher ngas prices on to consumers.

The JAN26 NYMEX contract is trading at $5.54 this morning.