Natural gas in the US rises 4% due to the increase in the price of oil and forecasts of greater demand

The futures of gas natural in the United States they rose about 4% on Monday from a one-year low recorded in the previous session, helped by higher oil futures and forecasts of slightly higher-than-expected heating demand next week.

Oil futures rose more than 3% after China’s move to reopen its borders boosted the outlook for fuel demand and dwarfed global recession concerns.

Gas futures for February delivery were up 14.5 cents, or 3.95%, at $3.855 per million British thermal units (mmBtu) as of 1348 GMT. On Friday, the contract closed at its lowest level since December 30, 2021.

That keeps the gas contract in technically oversold territory, with the relative strength index (RSI) below 30 for the eighth straight day for the first time since February 2018.

After posting their worst start to the year on record, US gas futures were still down around 14% year-to-date after rising 20% ​​in 2022.

That gas price plunge prompted gas speculators last week to increase their net short positions in futures and options on the New York Mercantile and Intercontinental Exchanges for the third week in a row to their highest level since October 2022, according to the report. Commitments of Traders of the United States Commodity Futures Trading Commission.

In the spot market, meanwhile, gas for next Monday at the US benchmark Henry Hub in Louisiana fell to $3.43 per mmBtu, its lowest level since December 2021.

Traders said the biggest market uncertainty remains when Freeport LNG will restart its export facility for liquefied natural gas (LNG) in Texas.

After several delays from October to November and then to December, Freeport now expects the facility to return in the second half of January, pending regulatory approvals.

Analysts have long said Freeport would likely return in the first quarter or second quarter of 2023 because the company still has a lot of work to do to satisfy federal regulators, including training staff on the new procedures, before restarting. plant.

When Freeport returns, US demand for gas will skyrocket. The plant can convert about 2.1 billion cubic feet per day (bcfd) of gas into LNG, which is equivalent to approximately 2% of US daily production.

Freeport closed on June 8 after a pipeline failure caused an explosion due to inadequate test and operating procedures, human error and fatigue, according to a report by consultants hired to review the incident and suggest corrective measures.

Several vessels, including Prism Diversity, Prism Courage, Prism Agility and Elisa Larus, have been waiting in the Gulf of Mexico to pick up LNG from Freeport, some since early November. Other ships were sailing to the plant, including the Corcovado LNG, scheduled to arrive in mid-January, and the Prism Brilliance, Kmarin Diamond and Wilforce, scheduled for late January.