TMN - Natural gas

Natural gas prices rallied amid production decline

On Monday, natural gas prices significantly edged up following the latest bullish government inventory report. The US NGAS futures surge 4.56% or 0.28 points to $6.31 metric million British thermal units. This movement extended the significant upturn of 14.28% to $6.30 MMBtu.

The US Energy Information Administration recently reported a storage build of 60.00 Bcf. Accordingly, the figure came in 15.00 Bcf below the median estimates. This figure came in contrast with an expected solid inventory increase of natural gas.

Analysts anticipated the inventories to keep the market on pace for adequate supplies in storage by the end of the injection season.

Moreover, the latest report marked a notable shift after bearish inventory reports in the two previous weeks. Those readings followed the early June fire at the Freeport LNG facility. The shutdown has altered the domestic market by roughly 2.00 Bcf/d through the summer months.

Nevertheless, the imbalance between supply and demand still stokes worries in the natural gas sector. There are questions about the magnitude of summer consumption and the market’s ability to meet it even with the additional Freeport supplies.

Freeport liquefied natural gas facility’s shutdown

The Freeport LNG facility is the seventh-largest in the world and the second-largest in the United States. Subsequently, the terminal’s export capacity is slightly above 2.00 billion cubic feet per day (bcf/d).

In line with this, the shutdown has significantly impacted US natural gas prices. Meanwhile, the less supply has provided upward pressure on European and Asian prices.

Previously, the company planned to resume exports through September and return to total production by year-end. However, the American pipeline safety regulator found unsafe terminal conditions.

Correspondingly, the facility must submit a plan first for an independent investigator to provide a report on the damage. In addition, it must also have a third-party review of its LNG storage tanks.

Still, US natural gas prices are on track to take an uptrend as the summer approaches. Experts cited more power demand to cool buildings amid low coal inventories, benefitting NGAS.

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