NYREADERS.COM – The U.S. natural gas production has returned to high levels in mid-February although natural gas prices are on a downward trend.
“Despite a cold freeze disrupting some production earlier in January, natural gas production has returned to high levels, with dry production at an average of 104.7 billion cubic feet per day (Bcfd) as of the week ending 14 February,” global energy research agency Rystad Energy said in its latest report.
Producers will likely stick to existing production levels to take advantage of higher prices over winter, even though recent periods of lower prices, it said.
US gas demand remains tepid as the weather has returned to being warmer than usual.
The reported deviation from normal for heating degree days (HDD) across the US was -45 as of the week ending 8 February.
This implies that there has been a lower demand for heating compared to the average for the same period, the research agency said.
Weather forecasts indicate that HDDs will stay lower than expected until the end of February, indicating that warmer-than-usual weather will keep a lid on heating demand.
As a result of solid production and generally weaker demand, US gas storage levels are still high at 2,535 billion cubic feet (Bcf) as of 9 February 2024, compared to 2,266 Bcf on 10 February 2023.
Freeport LNG remains offline due to technical issues on one of its three trains.
Feedgas to the site was at 1.55 Bcfd on 16 February, compared to 2.1 Bcfd throughout most of December 2023 and January 2024, Rystad noted.
“With unutilized capacity reducing demand for feed gas, Henry Hub prices may be more supported when Freeport LNG resumes service later in February,” it said.
Meanwhile, gas and LNG flows into Europe remain steady as warmer-than-normal winter weather keeps demand low. Norwegian pipeline gas flows to Europe were 338.49 million cubic meters per day (MMcmd) as of 18 February, slightly less than the 350 MMcmd seen earlier in the winter.
This is due to an unplanned outage at the Karsto processing plant, which has impacted 12.5 MMcmd of capacity, with ongoing planned maintenance set to impact an additional 12.1 MMcmd through to 29 April.
A dip to 317.80 MMcmd on February 15 and 16 did little to reverse bearish fundamentals in Europe’s well-supplied market.
