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An unconfirmed tweet about Freeport LNG is upending gas markets

bloomberg.com

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Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#11

Post by deniz_tekalp »

crmd wrote: post #7

Can someone explain why the rumor of cracked pipes and delayed restart of a terminal would cause the futures price to go down? I would think that news of a supply constraint would cause the price to go up. TIA

US has a large supply of natural gas and domestic prices are cheap. LNG prices are very high globally. The price discrepancy exists because there is not enough LNG export capacity. This is a very large LNG export facility. When it gets back on global LNG supply should increase and prices should fall. Domestic supply should decrease and prices should increase.

Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#12

Post by ohwellhere »

froh wrote: post #8
JumpCrisscross wrote: post #2

Quoted post unavailable.

whut?

It's a useless comment, but this is what they were referencing: https://en.wikipedia.org/wiki/Section_230

I think the implication is that if there are significant financial repercussions for social media posting then some portion of the government would revoke Section 230 protection from the providers; e.g. Musk's Twitter would become the publisher officially.

Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#13

Post by thwayunion »

crmd wrote: post #7

Can someone explain why the rumor of cracked pipes and delayed restart of a terminal would cause the futures price to go down? I would think that news of a supply constraint would cause the price to go up. TIA

The terminal is for exports from the US (particularly to Europe), and the futures contracts are on US gas prices.

Europe desperately needs gas this winter. Markets are pricing in the assumption that the US producers will get great prices from European consumers this winter.

If US gas can't get to Europe then the US can't sell that gas at high prices in Europe. Also, additionally, the domestic market will be flooded in supply.

Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#16

Post by nuclearnice3 »

crmd wrote: post #7

Can someone explain why the rumor of cracked pipes and delayed restart of a terminal would cause the futures price to go down? I would think that news of a supply constraint would cause the price to go up. TIA

When operational, this facility consumes billions of cubic feet of natural gas [1]. They take gas make it liquid, put it on a boat, ship it.

If they have cracked pipes, they are less likely to reopen.

Not reopening, not going to consume the gas.

Less demand for gas.

Price drops.

[1] https://www.eia.gov/todayinenergy/detail.php?id=52859

Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#17

Post by toomuchtodo »

ohwellhere wrote: post #12
froh wrote: post #8

Earlier quoted context omitted.

whut?

It's a useless comment, but this is what they were referencing: https://en.wikipedia.org/wiki/Section_230 I think the implication is that if there are significant financial repercussions for social media posting then some portion of the government would revoke Section 230 protection from the providers; e.g. Musk's Twitter would become the publisher officially.

If Twitter’s policies do enough economic damage, one would expect Congress to hold committee meetings and consider modifying or removing Section 230 protections. It’s not terribly far fetched.

Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#18

Post by twawaaay »

thwayunion wrote: post #13
crmd wrote: post #7

Can someone explain why the rumor of cracked pipes and delayed restart of a terminal would cause the futures price to go down? I would think that news of a supply constraint would cause the price to go up. TIA

The terminal is for exports from the US (particularly to Europe), and the futures contracts are on US gas prices. Europe desperately needs gas this winter. Markets are pricing in the assumption that the US producers will get great prices from European consumers this winter. If US gas can't get to Europe then the US can't sell that gas at high prices in Europe. Also, additionally, the domestic market will be flooded i…

Isn't it true that the price for gas in Europe is very inelastic at the moment (meaning they will pay pretty much any price to get it) and so any shortage of it will cause dramatic price increase? Also, Europe can't easily switch to another source of gas because they have maxed out everything they could.

This is basically the reason why OPEC restricts oil production, it is just here the same is happening unintentionally by LNG terminal malfunction.

--

Besides, looking at that graph it looks that the "plunge" is on the order of normal price change noise. Just look at the history from before the "plunge". Clickbait.

Re: An unconfirmed tweet about Freeport LNG is upending gas markets

#20

Post by bbryant »

crmd wrote: post #7

Can someone explain why the rumor of cracked pipes and delayed restart of a terminal would cause the futures price to go down? I would think that news of a supply constraint would cause the price to go up. TIA

The futures price is for US. The terminal is for export. So terminal failure pushes more supply into US market.
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