For the first time in more than a decade, US natural gas is poised to be the world’s most expensive amid virus upheavel
This is significant as it shifts the premium that gas in Asia/Europe has historically commanded over U.S. prices and adds a hurdle to American LNG exporters
This is significant as it shifts the premium that gas in Asia/Europe has historically commanded over U.S. prices and adds a hurdle to American LNG exporters
How did this happen?
1) US gas futures have rallied as a historic crash in oil prices is seen driving shale producers to halt more drilling and curb output of gas, which is extracted as a byproduct
bloomberg.com/news/articles/…
1) US gas futures have rallied as a historic crash in oil prices is seen driving shale producers to halt more drilling and curb output of gas, which is extracted as a byproduct
bloomberg.com/news/articles/…
2) In Europe and Asia, prices are sliding to fresh lows due to a supply glut and languishing consumption amid the pandemic
bloomberg.com/news/articles/…
bloomberg.com/news/articles/…
U.S. gas futures for May delivery fell to $1.806/mmbtu on Thursday
For comparison, Asia’s benchmark LNG price, the Japan/Korea Marker, fell to $1.94/mmbtu on the same day. UK NBP slipped to $1.706
This chart helps illustrate the massive drop in gas prices in Asia/Europe:
For comparison, Asia’s benchmark LNG price, the Japan/Korea Marker, fell to $1.94/mmbtu on the same day. UK NBP slipped to $1.706
This chart helps illustrate the massive drop in gas prices in Asia/Europe:
U.S. gas had consistently been the cheapest since the shale revolution, which flooded the country with fuel and turned it into the world’s biggest producer
Giant export terminals were financed and built by attracting customers through contracts linked to cheap American gas prices
But with the arb tightly shut, buyers have started canceling June loading cargoes from US projects ⬇️
But with the arb tightly shut, buyers have started canceling June loading cargoes from US projects ⬇️
To be sure, this is likely temporary and not the new normal
LNG demand around the world will continue to grow (and will likely bounce back after Covid-19 lockdowns end)
And we could see the market really start to tighten by the mid-2020s if new LNG projects aren't financed
LNG demand around the world will continue to grow (and will likely bounce back after Covid-19 lockdowns end)
And we could see the market really start to tighten by the mid-2020s if new LNG projects aren't financed
