TMN - Natural gas

US Natural gas sinks after Texas terminal fire

On Thursday, US natural gas prices slumped after the reports of a fire at the Texas export terminal. This incident threatened to leave fuel supplies stranded in shale basins amid the soaring overseas demand.

The American NGAS futures for the July delivery plummeted 5.48% or 0.48 points to $8.22 per metric million British thermal units (MMBtu). The market skidded as traders anticipated the outage would lower domestic consumption.

The fire occurred at the liquefied natural gas terminal in Quintana, Texas, about 105.00 kilometers south of Houston. It started at about 11:40 a.m. local time on Wednesday and is still under investigation.

Subsequently, the freeport receives about 2.00 billion cubic feet of NGAS, representing 2.50% of the output from the Lower 48 US states. It is also the operator of one of the country’s largest LNG export sites.

Experts cited that the explosion will shut the plant for at least three weeks. In line with this, the blaze could significantly impact global supplies of natural gas. This conflict came as Europe clamored for cargoes amid the geopolitical crisis in its eastern region.

Moreover, US gas stockpiles are lower than normal for the time of year. Regardless, prices have traded at the highest since 2008.

European natural gas futures surge

Meanwhile, British natural gas futures skyrocketed 22.41% or 36.49 points to $199.33 per therm. Likewise, Dutch NGAS contracts soared 9.08% or 7.72 points to $92.89 per megawatt-hour. Both benchmarks are up 143.00% and 200.00%, respectively, over the past year.

European prices surged to all-time highs after Russia’s invasion of Ukraine triggered volatility in the market.

The EU relies on Moscow for 40.00% of its domestic natural gas needs, almost arriving in the region via pipeline. Notably, there are very few LNG ports in the bloc, indicating that it will take some years to reduce this reliance.

 

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