US Natgas Drifts Lower With Expectation of Small Storage Draw

Front month Henry Hub natural gas is drifting back down after a rally yesterday up from 1.97$/mmbtu and the lowest since September 2020. Upside however continues to be limited by low demand and high production with smaller the normal US inventory withdrawals again expected this week.

• US Natgas MAR 23 down -1.4% at 2.14$/mmbtu
• The market has found some support with the partial restart of Freeport LNG but is still waiting for approval for the resumption of the last liquefaction train to able to resume full operations. A return to output of over 2bcf/d is likely to be at least several weeks away. Pipeline feedstock deliveries to Freeport LNG are today estimated up to 0.81bcf/d according to Bloomberg which would be the highest since the fire in June last year. Total deliveries to US export terminals are however showing lower than yesterday at 11.8bcf/d due to a reduction in flows to Corpus Christi LNG by 1.2bcf/d.
• Low demand this winter has added to the bearish trend and the latest NOAA forecast is doing little to change that. The outlook shows below normal temperatures in the west but above normal in eastern and central areas in the 6-10 day period. Domestic demand is today estimated by Bloomberg near normal at 86.3bcf/d.
• US production was yesterday steady at 101.3bcf/d and exports to Mexico at 5.7bcf/d.
• The latest EIA weekly gas inventories for the week ending 17 Feb will be released this afternoon with the expectation for a smaller than normal draw of -64bcf compared to the 5-year average of -164bcf.