Rising LNG demand to exert more pull on U.S. natural gas prices
U.S. liquefied natural gas (LNG) export capacity is on the brink of doubling in 2019, which will boost the super-cooled fuel’s influence on the U.S. natural gas market, where volatility surged in 2018 after several years of slumber. LNG exports have been the fastest growing source of U.S. natural gas demand since the country started ramping up exports in 2016, and is expected to expand deliveries in coming years as several more export terminals enter service. Its imprint is being felt in the U.S. gas futures market, which in November experienced its longest stretch of extreme volatility in nine years due to demand, low inventories and unseasonably cold U.S. weather. LNG currently accounts for just a small amount of overall domestic gas demand. But as the country opens more facilities for export to meet growing needs abroad, analysts said more ups and downs in prices are expected. “As LNG exports increase, so will future gas prices,” said Tom DiCapua, managing director of wholesale energy services at Con Edison Energy, a provider of energy management services, including the purchase of gas, for power plants owned by several companies. Prices at the U.S. Henry Hub benchmark in Louisiana hit $4.929 per million British thermal units (mmBtu) in November – their highest in four-and-a-half years. That was also well above the five-year average from 2013-17 of $3.25/mmBtu.
