U.S. natgas jumps 10% in volatile week on colder forecasts
Nov 2 (Reuters) - U.S. natural gas futures jumped about 10% on Wednesday during what has already been an extremely volatile week of trade on a drop in output at the start of the month and expectations gas demand will rise once the Freeport liquefied natural gas (LNG) export plant in Texas exits an outage.
"Prices are back up again as of today...as the overnight runs of the major weather forecast models locked on to the possible arrival of widespread below-average temperatures around mid-November," analysts at energy consulting firm Gelber & Associates said. Gelber noted that price volatility has been "ramped up" this week "as there is a tug of war happening in bullish and bearish drivers in the market."
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Wednesday's price jump came despite forecasts for lower demand over the next two weeks with the weather expected to remain mild through at least mid November. That should allow utilities to keep adding gas into storage for a few weeks beyond the usual Oct. 31 end of the injection season.
Freeport LNG expects its 2.1-billion-cubic-feet-per-day (bcfd) export plant to return to at least partial service in early- to mid-November following an unexpected shutdown on June 8 caused by a pipeline explosion.
At least four vessels were already lined up to pick up LNG at Freeport, according to Refinitiv data. Prism Brilliance and Prism Diversity were waiting off the coast from the plant, while Prism Courage was expected to arrive on Nov. 4 and Grace Freesia in December.
Front-month gas futures rose 55.4 cents, or 9.7%, to settle at $6.268 per million British thermal units (mmBtu). That follows a rise of 12% on Monday and a drop of 10% on Tuesday.
Rapid price changes in recent weeks have boosted the contract's 30-day implied volatility index to its highest level since October 2021 for a second day in a row. The market uses implied volatility to estimate likely price changes in the future.
Overall, U.S. gas futures were still up about 67% so far this year as much higher global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's Feb. 24 invasion of Ukraine. Gas was trading at $39 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $28 at the Japan Korea Marker (JKM) in Asia.
(Reporting by Scott DiSavino; Editing by Nick Zieminski and Mark Porter)