NATGAS: Natural Gas End of Day Summary: Henry Hub Down 9.5%
Feb-28 19:29
Henry Hub is losing ground today and set for a net decline on the week of near 9.5% as near record production is set against strong LNG exports while demand holds just below normal.
- US Natgas APR 25 down 2.6% at 3.83$/mmbtu
- US Natgas MAY 25 down 2.2% at 3.9$/mmbtu
- US gas rig count according to Baker Hughes: 102 (3) - down 13 rigs, or 11.3% on the year.
- Lower 48 natural gas demand has edged down to 80.3bcf/d today to remain below normal. The lower 48 forecast shows an average temperature dip this weekend before recovering next week.
- The NOAA 6–14-day outlook shows below normal in the west, above normal in central areas and near normal in the eastern US.
- US domestic natural gas production continues to increase up towards the record high of 108.37bcf/d seen earlier this month, at 107.8bcf/d today.
- US LNG export terminal feedgas is at 15.57bcf/d today, according to Bloomberg, compared to an average of 15.1bcf/d in February and a record high of 15.9bcf/d on Feb. 23.
- Russian LNG exports are down 7.3% in the first two months of 2025 vs a year prior, LSEG figures show as sanctions bite.
- The USTR is proposing a fee of up to $1.5m for each port call by a Chinese-built ship or Chinese shipping company, a move bullish for LNG prices and freight.
- The BP-chartered British Achiever was positioned next to Sepetiba Bay’s FSRU in Brazil Feb. 27 for an LNG cargo delivery, in what would be the first arrival since September, Platts said.
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STIR: Post-FOMC Calls
Jan-29 19:28
- Block, 5,000 SFRM5 95.87/96.00 call spds, 1.5 vs. 95.765/0.08%
- Update, over -15,000 0QH5 96.62/97.12 1x2 call spds, 0.75 vs. 96.145/0.05%
STIR: Modest Hawkish Tilt On FOMC Statement
Jan-29 19:15
- Fed Funds implied rates see a modest climb on the FOMC statement, to extend the day’s increase, mainly helped by the removal of the reference to inflation making progress line.
- Odds of a cut next meeting are further trimmed to 6.5bp vs 7.5bp prior and a next 25bp cut tilts a little more towards July over June (June to 24bp vs 26bp prior).
- There are 45bp of cuts priced for 2025 vs 47bp pre-release and 50bp this morning (which had aligned with the median dot last month).
FED: Statement: Surprise Hawkish Removal Of "Progress" In Inflation
Jan-29 19:12
See below for a comparison of the new FOMC Statement to the previous one released in December.
- The new Statement contains a hawkish-leaning surprise.
- While it was somewhat expected that the language on the labor market would change to reflect recent stabilization in conditions and the unemployment rate, we did not see many expectations that they would change the language characterizing inflation.
- They removed "has made progress toward the Committee's 2 percent objective", while retaining language saying that it "remains somewhat elevated".
- Arguably this is the most hawkish the language has been on inflation since "In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective." (May 2024). In the meetings since then, they have noted "progress" on the inflation front, but not this time. The Statement introduced the "has made progress" toward 2% in November's statement, so that lasted for two meetings.
- This will be a key question for Powell at the presser.
