U.S. LNG exports fall 5% as shipments to Europe slip

HOUSTON, Feb 1 (Reuters) – U.S. exports of liquefied natural gas (LNG) declined 5% to 6.84 million tonnes in January compared to the prior month as cold weather boosted domestic demand and as producers sent less gas to European customers, Refinitiv Eikon data showed on Wednesday.

A cold snap hitting the United States is expected to modestly impact gas supply balances in the coming weeks, even amid bearish scenarios of tight dry gas supplies, according to analyst Ade Allen from consultancy Rystad Energy.

A total of 95 cargoes carrying LNG departed last month from U.S. ports mainly bound for customers in Europe, which received 68% of exports. Asia took 23% of total, according to the data.

In December, U.S. LNG exports had increased to 7.22 million tonnes as producers made an effort to supply as much as possible to Europe. Clients there took 79% of total exports that month.

More gas available to domestic customers has contributed to low gas prices. U.S. gas futures traded on Wednesday at the Henry Hub delivery site at a 21-month-low of $2.52 per million British thermal units.

“Even with the recent forecast for a cold blast in early February, we foresee Henry Hub prices struggling to find upward momentum,” Allen said in a note to clients this week.

Delays to restart the second-largest U.S. LNG plant, Freeport LNG, after a fire have also created limitations to export the superchilled gas since mid-2022.

Freeport LNG on Tuesday asked U.S. regulators for approval to supply natural gas to one of the three idled units at its Texas plant, a milestone in efforts to restore production after a seven-month outage. Federal officials had barred the producer from resuming output until they could complete an extensive safety evaluation.

Allen and other analysts believe it could be months before Freeport LNG’s three units are in full production. Once the facility restarts, there are no other new LNG export sites due to go online this year, which had not happened since 2016.

“After one of the tightest gas markets of the last decade in 2022, the stage is set for one of the most oversupplied markets we’ve seen in years,” consultancy RBN Energy said.