Natural gas prices plunge to 25-month low as key LNG plant in Texas looks to resume exports

  • Natural gas prices fell to a 25-month low on Monday, falling as much as 5%.
  • The drop came despite news that a key LNG export hub in Texas is looking to reopen.
  • Prices have fallen more than 30% since the beginning of the year on the back of mild winter weather.

Natural gas prices eased on Monday amid forecasts of mild winter weather and a report that the Freeport LNG export center in Texas has requested permission from federal regulators to reopen.

Prices fell 5% before cutting losses to 3.3% at $2.43 per million Btu, nearing their lowest level since December 2020.

This year, natural gas prices have fallen by more than 30% and almost 80% from their record high in August 2022, after Russia cut off gas supplies to Europe and provoked an energy crisis there.

The Freeport LNG plant was first shut down in June last year due to a fire. This prevented more domestic supplies from being available for export, leading to lower prices in the US.

A full resumption of operations and exports will help support prices as more U.S. supplies are likely to be sent overseas.

But the Freeport plant, the second largest LNG exporter in the US, is not due to fully resume operations in the coming months, according to regulators and analysts cited by Reuters. And on Monday, only the so-called Phase 1 of the plan to resume commercial activity was presented to the US Federal Energy Regulatory Commission.

Meanwhile, forecasts of mild winter weather continued to put pressure on natural gas prices as demand for heating fuel lags.

Natural gas is currently flowing to the Freeport plant, although exports have yet to resume. On Monday, the amount of supercooled fuel at the facility reached its highest level since the closure of the export hub. Flows were approaching 500 million cubic feet per day, up sharply from an average of 43 million bpd since January.

But that increase is still only a fraction of Freeport’s total capacity, which can turn 2.1 billion cubic feet of gas per day into LNG when operating at full capacity.

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