LNG Stocks To Watch After Natural Gas Prices Spikes To 14-Year Highs

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LNG stocks generally traded higher on Wednesday, a day after US natural gas futures fell from levels not seen since 2008. Prices rose after news of a major pipeline supplying gas from Russia to Europe. Prices fell after a reported delay in the restart of the Freeport LNG export terminal in Texas.




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Freeport LNG said Tuesday it expects partial operations to resume at the Quintana, Texas export terminal in early November, compared to previous estimates for October. The facility aims to ramp up to sustainable levels of at least 2 billion cubic feet per day (bcf/d) by the end of November. Full capacity is not expected to return until March 2023, the company reports.

The privately held company had previously estimated that its export terminal, one of the largest in the country, would be offline for just three weeks after a fire and explosion on June 8 knocked it out. On August 4, Freeport LNG announced that it has agreed with regulators on steps to reopen the export terminal. The company estimated it would be operational by early October.

According to the US Energy Information Administration, total peak LNG output capacity in 2021 was approximately 12.98 bcf/d. The Freeport LNG plant can produce approximately 2 billion bcf/d of LNG. That accounts for more than 15% of the US’s LNG export capacity.

Nord Stream news hits natural gas prices

Natural gas futures traded less than 1% higher early Wednesday, at about $9.20 per million UK thermal units.

On Tuesday, US natural gas prices rose above $10 per mmBTUs for the first time since prices soared above $13 in June and July 2008.

This week’s price spike came after Gazprom announced it would shut down flows through the Nord Stream pipeline, which connects Russia’s oil fields to Europe, for three days in late August. Nord Stream supply had previously been reduced to 20% of its previous volume, increasing the pressure on European Union countries to stockpile fuel for the winter.

In 2021, Russia was responsible for almost half of the EU’s gas imports. So far, 75% of total US LNG shipments have gone to Europe by 2022, compared to 34% in 2021, according to federal data. The US is the largest natural gas producer in the world.

LNG stocks and natural gas producers

LNG stocks Cheniere Energy (LNG) and New fortress energy (NFE) together with natural gas producer Devon Energy (DVN) all fell sharply higher in Tuesday’s stock market trading.

Cheniere was up 0.4%, while NFE gained 3.5% on Wednesday. DVN rose by 2.2%.

Houston-based Cheniere is the largest producer of liquefied natural gas in the US and one of the largest LNG operators in the world. Its services range from gas purchasing and transport to chartering and delivery of ships. Cheniere owns and operates liquefied natural gas terminals near Corpus Christi, Texas.

Cheniere’s second-quarter LNG sales increased 165% to $8 billion as the company earned $2.90 per share, compared to a net loss of $1.30 per share in the second quarter of 2021.

LNG Shares Golar, Flex

LNG transport and processor Golar LNG (GLNG) rose slightly on Tuesday, while competitor flex LNG (FLNG) sank 4.6%.

Flex LNG missed earnings estimates early Wednesday, but announced that it expects results beyond expectations in the second half of 2022. FLNG shares rose in Wednesday’s trading, rising nearly 6.2%.

“We are in the midst of a global gas crisis where buyers, especially in Europe, are scrambling to get hold of LNG cargoes to ensure adequate energy supplies for the winter,” CEO Øystein Kalleklev said in a statement.

“New LNG export projects will create a future demand for freight transport, further supporting the very solid long-term foundations of our industry,” Kalleklev added.

GLNG shares added 4.7% on Wednesday.

Even before the Freeport LNG update, LNG carriers were in high demand, with European pressure to increase competition for ships. According to the Wall Street Journal, traders are reportedly responding to a $24.1 billion increase in demand in new tanker orders so far this year, easily surpassing the 2021 full-year record of $15.6 billion. .

Natural gas producers Range Sources (RRC), EQT (EQT) and Coterra Energy (CTRA) all recovered early on Wednesday, after falling back on Tuesday.

LNG inventories have been largely consolidating since April, although demand for LNG has surged over the past year. Even before the Russian invasion of Ukraine, European electricity prices had skyrocketed. With the natural gas supply from Russia largely off the table in Europe, supplies are severely limited. However, the US’s export and transportation capacity is also at its limit, so any additional gas produced equals an oversupply.

Oil market dampens energy supplies

As US natural gas prices soared to record highs, US crude oil futures slipped through uncertainties surrounding the revival of the 2015 Iran nuclear deal. .5 million barrels per day.

But on Tuesday, oil inventories rose as US crude recovered nearly 4% to $94 a barrel. Underlining the uncertain outlook for the oil market, Saudi Arabia indicated that the Organization of the Petroleum Exporting Countries and its allies could cut oil production in September.

The oil cartel, under which Russia is also known as OPEC+, decided in early August to cancel the planned monthly production increases of 100,000 barrels per day for September. The quota increase is equivalent to 0.1% of global oil demand. OPEC+ will meet again on September 5.

But two weeks ago, the group ran against most industrial prospects, lowering demand forecasts for the remainder of this year and 2023 by more than 250,000 barrels per day.

After briefly reaching $130 a barrel in March after Russia invaded Ukraine, US crude oil futures fell below $86 before rallying around $95 on Wednesday.

The Rig Factor: Wet gas drilling is declining

As oil prices look for a new margin of trade, US rig activity recorded its first drop in three weeks since July 2020, according to weekly data from Baker Hughes (BKR). While the number of rigs drilling for oil has remained stable, the number of rigs drilling for natural gas has fallen by one per week over the past two weeks.

As a result, the total number of U.S. oil rigs fell by one to 762 for the week ending August 19. Oil rig activity is still above last year’s low, with a tally of 503 active rigs in August last year.

Follow Kit Norton on Twitter @KitNorton for more coverage.

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The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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