Natural Gas End of Day Summary: Henry Hub Falls

Henry Hub is set to close lower for the third consecutive day as it hits levels last seen in Sep. 2020. Additional pressure has come from EIA data showing a US stock draw below the seasonal five-year average.

• The EIA weekly gas inventories for the week ending Feb 2 showed a draw of -75bcf compared to the expectation for a draw of -75bcf according to a Bloomberg survey and the seasonal normal draw of -201bcf.
• The small draw driven by the switch to warmer weather at the end of January has helped rebuild the US inventories surplus which had been falling in the previous weeks. Total stocks are at 2,584bcf compared to the previous five-year average of 2,345cf.
• Japan’s LNG demand is forecast to decline by 8% year on year this summer – April to September - to 27.4mn tons, according to BNEF.
• The global LNG market is likely to remain tight during 2024 amid higher demand from China and despite stable supply according to TotalEnergies CEO Patrick Pouyanne.
• A big discount in LNG prices to oil and a “huge discount” to diesel are boosting demand in new regions according to CEO of shipowner Flex LNG, Oystein Kalleklev.
• The arbitrage for US LNG cargoes to Northeast Asia is almost open via the longer route around the Cape of Good Hope, according to Spark Commodity data.
• Third and final train of the Arctic LNG project in Russia has been put on hold, although the second train is likely to be installed, according to Reuters citing stakeholder Total.
• Russian and Iranian companies are discussing the creation of a gas hub in Iran.