Baseload Natural Gas Prices Trending Mixed for February amid Early Cold, Solid Supply Picture

Upstream in Appalachia, the potential for another round of freeze-offs in the next couple of weeks may lead to a modest recovery in prices.

After a mostly mild January, recent weather data shows bitter winter weather making another appearance across the Lower 48 in the coming days.

NatGasWeather said the next system would likely sweep across the Midwest Friday-Sunday, opening the door for a series of frigid shots over Canada to advance aggressively into the northern and central United States next week.

Although there is potential for the subfreezing air to advance more aggressively south and eastward, NatGasWeather said weather models currently show the biting cold moderating and slowly retreating toward the Canadian border by Feb.

Even with temperatures plunging in parts of the Lone Star State, traders brushed off the threat of freeze-offs in the Permian Basin, BWA data showed.

After all, December brought about Winter Storm Elliott, the first storm that came anywhere close to rivaling Uri before it in February 2021.

That said, “paralyzing” winter production freeze-off risks can no longer be dismissed as one-off events, according to EBW Analytics Group LLC.

Associated gas production is primarily driven by oil prices, not natural gas prices, and therefore would likely continue to grow even with gas prices in the dumps, according to Rubin.

The analyst also pointed out that current natural gas prices – February Nymex futures settled Wednesday at $3.067 – remain higher than any full-year average from 2015-2020, when full year Henry Hub prices averaged $2.11-$3.27.

After a rare January injection, subsequent withdrawals are expected to compare lightly with historical levels and eventually propel inventories to a more than 150 Bcf surplus over the five-year average before the late-January winter storm is taken into account.

Of course, Freeport LNG’s return remains a wildcard.

Even still, the timeline for preparation work, ongoing monitoring and additional federal approvals means it still could be several weeks before the LNG facility is back in operation.

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