(Reuters) U.S. natural gas futures edged up about 1%, paring earlier gains of over 8%, on expectations that Freeport LNG will delay the restart of its liquefied natural gas (LNG) export plant in Texas from November to December.
In addition to price swings due to Freeport, traders said futures soared earlier in the session due to forecasts for colder weather and higher heating demand than previously expected through the end of November.
Sources familiar with Freeport LNG's filings with federal safety regulators told Reuters on Monday that the company has not yet submitted a request to resume service to the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA).
Until late last week, Freeport said repeatedly that the plant, which shut after an explosion on June 8, was on track to return in November. The company, however, did not mention a November restart (or any restart date) in comments made on Friday or Monday.
Freeport's comments on Friday were in response to market rumors about pipe cracks, which Freeport called fake news. The company's comment on Monday were in response to rumors about delaying the plant startup until December, which Freeport refused to comment on.
After gas prices dropped more than 5% on Friday, some traders called on the Commodities Futures Trading Commission (CFTC) to investigate what Freeport LNG called fake tweets about cracked pipes at the plant.
"Any Tweets and/or posts on Freeport LNG branded letterhead that may have been obtained or published, are reporting false information and are not legitimate, official public information from Freeport LNG," Freeport said on Friday.
Front-month gas futures rose 5.4 cents, or 0.9%, to settle at $5.933 per million British thermal units (mmBtu). Earlier in the session the contract was up over 8%.
Rapid price changes over the past couple of weeks - futures gained or lost more than 5% on eight of the past 10 days - boosted the contract's 30-day implied volatility index to its highest level since hitting a record in October 2021. The market uses implied volatility to estimate likely price changes in the future.
FREEPORT DELAYS
Analysts at investment bank Goldman Sachs, energy consulting firm Gelber & Associates and others have said that lack of a request to resume service likely means the 2.1 billion-cubic-feet-per-day (bcfd) Freeport export plant will not return until December.
A couple of vessels, meanwhile, were waiting to pick up LNG from Freeport, according to Refinitiv data. Prism Diversity and Prism Courage were offshore from the plant, while LNG Rosenrot and Prism Agility were expected to arrive in late November.
But one vessel, Prism Brilliance, which had been waiting outside the Freeport plant, is now waiting outside Corpus Christi in Texas where Cheniere Energy Inc has an LNG export plant, according to Refinitiv data.
