U.S. natural gas gained 2% on Wednesday, thereby recovering marginally from its 10-month low in the previous session. This comes after the release of forecasts of higher demand for liquefied natural gas (LNG) exports over the next two weeks which exceeded previous estimates.
The main source of investor uncertainty going into 2023 is whether Freeport LNG will restart its Texas plant. Having been shut down due to several delays over October, November, and December, the company expects its facility to return to operation in the second half of January.
Should Freeport stick to its initial assessment, this would prove analysts’ expectations of a return during the first quarter of 2023 correct. Freeport’s return to operation is expected to drive an increase in the U.S. demand for gas.
Recently, numerous vessels have been spotted waiting in the Gulf of Mexico to fetch LNG shipments from Freeport, including Prism Diversity, Prism Courage, Prism Agility, and Elisa Larus. Some of these vessels have been waiting since early November.
According to data provider Refinitiv, the average U.S. gas demand will jump from 110.5 bcfd this week to 121.5 bcfd next week despite the weather proving to be warmer than expected in January.