The outlook for U.S. LNG exports going into 2021 continued to improve, with fewer U.S. cargoes canceled for November and a strong recovery in demand in key Asian markets.

Five or fewer cargoes were expected to be canceled for November, according to a survey of LNG traders by S&P Global Platts. That compared to some 45 cargo cancellations reported in July.

"The continued ramp-up of the Chinese economy, lower retail prices in South Korea, and nuclear maintenance in Japan should all present tailwinds for the rest of this year for both demand and imports," analysts at Raymond James said in a recent note to clients. "In turn, most across the industry expect a solid rebound in LNG export utilization rates into winter 2020-21, with the leading indicator of cargo cancellations slowing substantially in recent months."

Feedgas deliveries to U.S. LNG terminals have rebounded sharply since the start of September, hitting levels of around 8 Bcf/d on Sept. 18. This happened even as one of the six major U.S. LNG export terminals, Sempra Energy's Cameron LNG terminal, remained offline because of power supply issues following Hurricane Laura.

Flows dropped back to around 5 Bcf/d on Sept. 21 as Tropical Storm Beta approached the U.S. Gulf Coast. Flows at Dominion Energy Inc.'s Cove Point LNG plant in Maryland also dropped off for scheduled maintenance that went into effect Sept. 21. A notice to customers issued by Cove Point did not say how long the maintenance would last, but the duration of similar scheduled maintenance outages in the past two years have lasted about three weeks.

U.S. LNG plants could still be operating at about 90% of their capacity this winter, according to Raymond James. The firm said Sept. 21 that it was adjusting its assumptions about utilization rates for the fourth time this year after a faster-than-expected improvement pace of recovery.

The global gas market was oversupplied by up to 5 Bcf/d over the summer, Raymond James said. About 175 U.S. LNG cargoes were canceled through October, with about 80% of that total initially scheduled for loading in the summer months.

The rebound in U.S. LNG exports has bolstered the prospects of winter gas prices rising above $3/MMBtu. The U.S. Energy Information Administration raised its 2021 natural gas price forecast earlier in September to $3.19/MMBtu, in part because of the rising demand for U.S. LNG. Raymond James said it expects gas prices exiting 2021 at $4/MMBtu.

Others have predicted a tighter market. Charif Souki, the pioneer of the first major LNG export facility in the Lower 48 and the executive chairman of the export-hopeful Tellurian Inc., said Sept. 22 that a winter Henry Hub gas price of $5/MMBtu is "almost inevitable at this stage," pointing to a decline in shale drilling.

"What is going to happen this winter is we are going to have serious depletion in the storage inventories, and we could come out of the winter with very little gas in storage unless the rig count increases dramatically," Souki said in a video released by Tellurian. "That is physically very difficult to accomplish."

But several analysts also expected that international gas markets likely need more time to rebalance and continued volatility should be expected. Raymond James estimated world LNG markets would remain oversupplied by about 2 Bcf/d in 2021.

"While early 2021 looks better than that of 2020, the market is still likely to see increased seasonal volatility, in our view," Raymond James analysts said. "Summer 2021 could look similar to 2020 with cargo cancellations as soon as next May."

S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.