Natural gas futures rebounded early Wednesday as traders continued to mull the impact of an extended outage at the Freeport liquefied natural gas (LNG) export terminal in the context of storage deficits and a potentially hot summer ahead.

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After plummeting $1.420 in Tuesday’s session following news that the Freeport LNG facility won’t see a return to full service until late this year, the July Nymex contract had recovered a chunk of those losses as of around 8:50 a.m. ET. The front month was up 31.1 cents to $7.500/MMBtu. August was up 30.9 cents to $7.489.

With an extended outage for the Freeport terminal, the odds of summer natural gas prices surpassing the $10 mark have “materially lessened,” analysts at Tudor, Pickering, Holt & Co. (TPH) said.

Not including Freeport, peak U.S. LNG export rates have reached 12.7 Bcf/d this year, the firm estimated.

However, “summer months tend to lag peak rates even when not in maintenance,” the TPH analysts said. “With that in mind, we see a minimum of 180 Bcf impact due to the 90-day outage at the project through mid-September, with a range of outcomes depending on the timing of the ramp-up of rates by train and the timing of incremental trains ahead of full operations in late 2022.”

While the “risk-reward for the summer months is clearly changed,” according to TPH, a continuation of recent hot weather trends could see prices “retrace some of the recent move as we trend through summer.” 

Bespoke Weather Services said the Freeport developments add more than 200 Bcf to its end-of-season storage estimate, putting the market on a trajectory to exit October with 3.35-3.40 Tcf.

“That is not super comfortable by any means, but definitely much less bullish than pointing to 3.15-3.20 Tcf,” Bespoke said.

A continued move lower in prices could bring an associated increase in power burns that would cut into some of that 200 Bcf freed up by the Freeport outage, according to the firm.

Further, even a modestly hotter-than-normal summer could quickly change the equation, Bespoke said. 

The firm estimated that demand averaging one gas-weighted degree day above normal this summer “would negate close to two thirds of the 200 Bcf from Freeport. This, of course, is not a done deal, but our expectations are for a hotter lean to the balance of summer.”