US natural gas prices plunged from the highest level since the 2008 commodity boom after news that a key LNG export terminal in Texas would delay restarting for another month.
The Freeport plant, which closed in June due to an explosion, was initially slated to begin exports in October. The company released a statement Tuesday afternoon specifying the restart date will now be pushed to mid-November.
The restart delay means more NatGas supplies for the US and less for Europe. The facility accounted for 20% of all US LNG exports.
Following the news, US Natgas tumbled more than 5% to $9.18/mmbtu after topping $10/mmbtu earlier in the session (the highest level since 2008).
Inversely, EU Natgas should move higher as this would mean fewer LNG carriers for the energy-stricken continent. The spread between EU and US NatGas is now at a record and should continue to widen after this news.
Continued elevated EU Natgas prices suggest European power plants could switch to crude this winter - which will put a bid under oil prices.
The Natgas market has watched Freeport's restart timeline very closely because it supplies tremendous amounts of LNG to Europe. The invasion of Ukraine exacerbated a NatGas supply crunch in Europe. In the first four months of this year, the US has sent nearly 75% of LNG exports to Europe.
US Natgas prices have been rising as production slowdowns have spooked traders into believing winter storage levels might not be adequate.
Lower 48 natural gas production took it on the chin today - with drops spread across the nation removing another 2 Bcf/d with the early prints. This went out first in our early fundy report at 4am CT - ping us to get started with a trial! email@example.com #natgas #ongt pic.twitter.com/yLTjE0Ulkz— Criterion Research (@PipelineFlows) August 23, 2022
No matter what, on both sides of the Atlantic, heating homes with NatGas will very expensive this year and may lead some people to burn firewood - as several European officials have already suggested.