U.S. natural gas futures fell more than 5% on news of a further delay in the resumption of initial operations at the Freeport LNG export plant in Texas.
Freeport LNG said it expects partial recovery to begin in early to mid-November, not October as originally estimated. The company said it expects to ramp up to sustain 2 billion cubic feet per day production by the end of November.
Front-month gas futures for September shed 48.7 cents, or 5%,to settle at $9.193per million British thermal units. The session low was $9.050.
Earlier, U.S. gas prices shot above $10 for the first time in about 14 years due to a surge in prices in Europe, where tight supplies persist. Prices reversed course on the Freeport news, and there was also some technical selling, said Phil Flynn, analyst at Price Futures Group.
However, the Freeport timeline has "only been pushed back a couple of weeks from what they originally anticipated, so the market may rebound here a little bit," Flynn added.
Global gas prices remained strong, with contracts at $77 per mmBtu in Europe and $56 in Asia . This should boost demand for relatively cheaper U.S. LNG shipments which have been limited by shutdown of the Freeport plant, which supplies about 20% of U.S. LNG exports.
Further pressuring the market, Russian state energy giant Gazprom said on Friday the country will halt natural gas supplies to Europe for three days at the end of the month via its main pipeline into the region.
The average amount of gas flowing to U.S. LNG export plants held at 10.9 bcfd so far in August, the same as July. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.
