U.S. natgas futures firm on elevated global prices

U.S. natgas futures firm on elevated global prices

U.S. natural gas futures edged up on Wednesday, buoyed by elevated global gas prices which offset limited pressure from a delay in the restart of the Freeport export hub.

Front-month gas futures

rose 13.7 cents, or 1.5%, to settle at $9.330 per million British thermal units (mmBtu).

Prices stabilized following a volatile session on Tuesday, when they hit $10 per mmBtu for the first time since 2008 before retreating on news of a delay in Freeport LNG’s fire-hit Texas plant's return to operation, which would continue to hit demand by hurting the country’s capacity to send the fuel abroad.

U.S. prices continued to take cues from elevated global gas rates, with contracts at $80 per mmBtu in Europe (TRNLTTFMc1) and $56 in Asia (JKMc1), a likely positive driver for relatively less expensive U.S. gas exports.

"A major component of what's directing U.S. gas prices is again what's happening in international markets, which are rallying from the Nord Stream 1 outage coming up at the end of August," said Robert DiDona of Energy Ventures Analysis.

The Freeport restart delay also compounded global supply woes to some extent.

"Although such a delay may not appear to disrupt the fall balances appreciably, it does require a significant adjustment in expected storage levels heading into the next heating cycle" with the supply shortfall likely to be reduced to around 250 billion cubic feet (bcf) or less by late November versus north of 300 bcf previously, Ritterbusch and Associates said in a note.

Elsewhere, gas production in Britain rose 26% in the first half of this year compared with the same period last year, an industry body said on Wednesday, as it cuts Russian energy imports in response to Moscow's invasion of Ukraine.