US LNG feedgas demand hits two-week high after several terminals ramp back up

US LNG feedgas demand hit its highest level in two weeks Aug. 13 as utilization rebounded at several major liquefaction facilities amid surging prices in end-user markets, S&P Global Platts Analytics data showed.

Looking ahead to the winter and beyond, the Platts JKM and Dutch TTF outlook is bullish, a trend that could provide a long runway for US LNG export strength even if domestic gas prices only rise modestly.

LNG netbacks for deliveries from the US Gulf Coast to Asia and Europe have surged above $9/MMBtu in recent days, up from around $8/MMBtu at the beginning of the month and around $7/MMBtu at the beginning of July.

JKM, the benchmark price for spot LNG delivered to Northeast Asia, was assessed at $16.95/MMBtu on Aug. 13. The run-up has led to a flurry of medium-term commercial transactions in recent months tied to US volumes that are linked to the JKM.

Gas deliveries to US LNG export terminals totaled 10.91 Bcf/d on Aug. 13, based on the morning cycle, Platts Analytics data showed. That was up 540 MMcf/d from the day before and was the highest level since July 30.

The increase came after production ramped up at Cheniere Energy's Sabine Pass and Sempra's Cameron LNG, both in Louisiana, and at Freeport LNG in Texas.

Asian LNG demand was being led by South Korea, where limitations on coal generation, warm weather and depleted storage stocks have boosted imports, and China, which posted a 27% year-on-year jump in LNG demand in July despite the latest data implying gas-fired power plant utilization rates have begun to decline from May highs.

On the supply side, stronger Australian LNG production due to maintenance rolling off has been tempered by continued constraints in Algeria, Trinidad and Tobago, Nigeria, and Norway, as well as maintenance in Russia, according to Platts Analytics. Scheduled maintenance and brief unplanned outages have caused US liquefaction terminal utilization to dip from time to time over the last several months.

US Henry Hub forward prices for the balance of summer and next winter have spent most of the last month above $4/MMBtu, with the strength breaking for both curves after the most recent weekly storage report. The balance-of-the-summer strip has shed around 20 cents from Aug. 11 settlement to average $3.87/MMBtu Aug. 13, according to preliminary settlement data from CME Group. While the December, January and February contracts remained above $4/MMBtu, the winter curve as a whole sank to $3.89/MMBtu Aug. 13.

Meanwhile, domestic demand remained strong, particularly for power burn, due in part to export demand for LNG.