Refinitiv shipping data showed that U.S. liquefied natural gas exports were flat last month, despite the arrival of winter weather in the Northern Hemisphere, leading utilities to build inventories for domestic use.
The implied volatility of U.S. natural gas futures, a measure of the likely movement in prices, hit a new record last week on the outlook for colder weather and doubts about the restart of the Freeport LNG plant in Texas this month. Since June, the plant has been idle.
Freeport LNG, which provides about 20% of U.S. LNG processing, hopes to resume gas processing in mid-December, depending on regulatory approvals. Analysts said it could be early 2023 before shipments resume.
In November, U.S. producers shipped a total of 88 cargoes carrying 6.31 million barrels of LNG, almost unchanged from the 6.28 million tons of the previous month, according to preliminary figures.
U.S. LNG producers sent more LNG to Europe, directing 72% of total cargoes to European customers compared to 20% to Asia. In October, 59% of U.S. LNG cargoes sailed to Europe and 24% to Asia.
Ade Allen, Rystad Energy's spokeswoman for clients said the market is going into heating season with sufficient storage, having built to 3.64 trillion cubic feet. Market participants can't get complacent because mother nature is the ultimate unknown. Supply from Appalachia went up last week after being tepid all year and volumes in the Permian and Haynesville shale fields increased.
There are concerns that a lack of robust supply growth could cause imbalances, especially in the spring of 2023, and that external risks, such as a rail workers strike, could push prices higher.