U.S. natgas dips on slightly cooler weather projections, Freeport shutdown

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U.S. natural gas futures fell more than 6% on Tuesday as a slightly cooler shift to near term weather forecasts added to headwinds from a prolonged shutdown of Freeport LNG export plant.

Front-month gas futures for August delivery on the New York Mercantile Exchange (NYMEX) fell 11.7 cents, or 2%, to $5.613 per mmBtu at 10:03 a.m. EDT (1403 GMT), after falling over 6% earlier in the session.

“The biggest component of the change in prices today has been the weather revision. We just came off the July 4th holiday, which means we had 3 days in a row with no natural gas futures trading. During those days, near-term weather forecasts have been revised significantly cooler, meaning gas-for-power demand will be less, relative to the expectations of last week,” said John Abeln, an analyst with data provider Refinitiv.

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Freeport’s gas export facility hit by fire earlier this month will not be allowed to repair or restart operations until it addresses risks to public safety, a pipeline regulator said on Thursday.

Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8, so the expected 90-day outage would leave around 180 bcf of gas available to the U.S. market.

Russia’s Gazprom could propose expanding its roubles-for-gas scheme for pipeline gas to include LNG, the Interfax news agency quoted a senior manager as saying on Monday. Meanwhile, Kremlin said that no decision had been made on whether to switch sales of Russian LNG to roubles.