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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

#21

Post by kmonsen »

veqq wrote: post #3

Commodity traders and investors are very networked and really like such immediate usage news. Many firms also count trucks/traffic near sites etc. so it isn't surprising to see people respond to this. However, the causation is unclear to me. European gas stocks are at full capacity as is and this Winter is warm with minimal gas burned so far. A 7% drop is par for course in the last few weeks. An extra piece of bad ne…

From what I have heard the fact that European gas storage is full is nice but not really all that meaningful. The gas storage is only large enough to last a week or something in that magnitude.

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

#22

Post by woranl »

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

Freeport buys US natural gas and turns that into LNG for export to Europe. With a plant shutdown, it’s not buying as much natural gas domestically. Hence price in US goes down. Despite still high globally.

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

#23

Post by teesnee »

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

Note the article's wording: "US natural gas futures plunged..." If the US can't export, there is increased domestic supply, causing the futures price to fall. If exports through the terminal resumed, US prices would rise since now global buyers are competing with domestic buyers, and prices between linked markets (e.g. US & EU) would equilibrate slightly. Also important to recognize that EU gas prices are much higher than US prices, so there is large demand for US->EU LNG shipments.

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

#24

Post by parker_mountain »

matai_kolila wrote: post #15
CyanLite2 wrote: post #4

Quoted post unavailable.

Why is anyone still believing this stuff? How is anything on Twitter taken seriously anymore??

> How is anything on Twitter taken seriously anymore

Although the average user on HN is terminally online, most people still view Twitter as a useful utility.

Every day Elon continues this charade is a day of incredible, massive brand damage.

Someone posting Eli Lily was pricing insulin for free caused their stock to plunge - along with other biotech companies. Someone convinced many people that an official Nintendo account said Mario was gay. No wonder advertisers are pulling their ads.

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

#25

Post by bombcar »

toomuchtodo wrote: post #17
ohwellhere wrote: post #12

Earlier quoted context omitted.

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.

Which would be sad, what we're seeing is too many quants dependent on twitter for "fast breaking news".

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

#27

Post by hn_throwaway_99 »

twawaaay wrote: post #18
thwayunion wrote: post #13

Earlier quoted context omitted.

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 unintentiona…

Not sure if your post is trying to contradict the post you are replying to, which made the very good point that what plunged are US gas futures. I assume that yes, this would be very bad news for European gas consumers.

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

#28

Post by CamperBob2 »

twawaaay wrote: post #18
thwayunion wrote: post #13

Earlier quoted context omitted.

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 unintentiona…

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.

Clickbait is literally the business model at Bloomberg: https://www.businessinsider.com/bloomberg-reporters-compensa...

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

#29

Post by sveme »

kmonsen wrote: post #21
veqq wrote: post #3

Commodity traders and investors are very networked and really like such immediate usage news. Many firms also count trucks/traffic near sites etc. so it isn't surprising to see people respond to this. However, the causation is unclear to me. European gas stocks are at full capacity as is and this Winter is warm with minimal gas burned so far. A 7% drop is par for course in the last few weeks. An extra piece of bad ne…

From what I have heard the fact that European gas storage is full is nice but not really all that meaningful. The gas storage is only large enough to last a week or something in that magnitude.

The German storage facilities hold gas for two months of typical January consumption rates.

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

#30

Post by netsharc »

matai_kolila wrote: post #15
CyanLite2 wrote: post #4

Quoted post unavailable.

Why is anyone still believing this stuff? How is anything on Twitter taken seriously anymore??

I guess it's traders gambling, "We're not sure if it's true, but if it's true, then we need to be ahead of the rest of the market!".

Interestingly, if I were a trader and I knew the Eli Lily tweet was fake, would I ask "What are the chances a many people are going to fall for this, and how will they react, and can I make a profit out of their stupidity?"

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