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Strong LNG Export Will Result in Further Increase in Prices of Natural Gas in the United States

The prices of natural gas in the United States will continue to rise as a result of strong LNG exports. The United States’ natural gas prices are up more than 4.2% after falling over 60% since mid-September 2022 because the market sentiment is negatively impacted by the expected increase in liquefied natural gas exports (LNG).

It was reported that natural gas futures increased as the market prepared for LNG units to restart in the coming weeks after maintenance, defying forecasts of mild weather that would typically put additional downward pressure on U.S. natural gas prices.

The Cove Point LNG export facility in Maryland operated by Berkshire Hathaway Energy will soon resume operations following a three-week maintenance shutdown. According to market experts, 0.8 billion cubic feet (Bcf) per day will be redirected to exports.

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Texas-based LNG export facility is also expected to resume operations, it has been idle since early June 2022 but is now anticipated to partially start-up in the first two weeks of November 2022.

There has been a downfall to 11.1 Bcf of natural gas flows to LNG plants on the U.S. Gulf Coast since the beginning of October 2022 from USD billion 11.5 Bcf per day in September and 12.9 Bcf per day in March 2022 due to maintenance and outages.

Ahead of the winter season, there is increasing pressure on the price of domestic U.S. gas as the demand for U.S. LNG from international markets rises. As a result of increased exports, the Federal Energy Regulatory Commission (PERC) predicted last week that natural gas prices this winter would be higher than usual.

In Q3 2022 earnings report, Kinder Morgan continued to be very bullish on LNG and predicted that the United States LNG exports would more than double from their current level of 11 Bcf per day to 28 Bcf per day by 2030.

The November Nymex contract was settled at USD 5.199 per MMBtu after declining for six straight trading sessions. Futures for December increased from 28.1 cents to USD 5.753. Additionally, spot gasoline costs increased from pre-weekend lows, increasing NGI's spot gas to USD 4.165.

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Based on an October maximum total scheduled supply of approximately 37 MMcf per day for October 21, 2022, Wood Mackenzie claimed that receipts from NBPL onto WBI are unaffected by this constraint. Between October 01- October 22, 2022, WBI deliveries to NBPL at the Charbonneau connection averaged about 80 MMCf per day and peaked at about 94 MMcf per day on October 11, 2022.

According to Procurement Resource, due to robust LNG shipments, natural gas prices in the United States will keep rising. Natural gas prices in the United States are up more than 4.2% after plummeting more than 60% since mid-September 2022 as a result of the market's negative reaction to the anticipated rise in liquefied natural gas shipments.

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