The natural gas markets have seen continued historic volatility leading up to the winter months. We’ve seen the market react to mild temperatures in Europe and the lower 48. In September of 2022, the NYMEX was above $9.00/dth; as news broke that the Freeport Liquefied Natural Gas (LNG) facility would not be coming back online to export until November at the earliest we saw the NYMEX drop roughly 15%. The natural gas marketplace is now a global LNG marketplace, and we see Dutch Title Transfer Facility (TTF) rates in the $40 range per dth.
Europe started seeing colder temperatures arrive in the last week of November, and the move northward for LNG traded in tandem. One of the elephants in the room is demand in the Japanese Korean Marketplace (JKM). Germany will be taking its first LNG cargo the week of December 16th. As additional import facilities come online, the market is expected to factor this in as additional demand. The JKM could also bring further demand during December as colder temperatures also arrive. If we see a significant increase in that marketplace, it could defer LNG tankers from the European market, adding further cost pressure to Europe. Global LNG demand hit a new record in November, up roughly 10% from October. The Freeport facility is expected to come online at the end of December, which can add another wrinkle in pricing here domestically. Currently, domestic NYMEX gas is above $6.00/dth. With colder temperatures arriving, and the Freeport facility coming online, we will see the market reaction by the first of the year.