Gas Prices Rise On Freeport LNG Production Uncertainty

European LNG prices rose sharply on Tuesday but are still down over 8% in July to date. They increased 4.6% to EUR 32.80, close to the intraday high of EUR 33.05. Supply concerns drove the market higher, as output at Texas’ Freeport liquefaction plant remains impacted by damage from Hurricane Beryl and planned maintenance has reduced Norwegian flows. Expectations of warmer weather also boosted prices.

• Freeport LNG production will be restarted in phases with the first line reopening this week. For now the facility’s total output will be reduced but it is not known for how long. It ships LNG to Europe and Asia and according to Bloomberg at least seven cargoes have been cancelled.
• Freeport can liquefy up to 2% of US daily gas output, and thus the reduction in production has weighed on US natural gas prices. In addition, gas going to the Corpus Christi LNG facility is down due to pipeline maintenance. Henry Hub rose 1.2% to $2.18 on Tuesday though as buyers took advantage of lower prices which are down 16.1% this month.
• The IEA expects only minimal additional LNG in 2024 while it forecasts demand to grow by 2.5%, as heating and industrial demand rise in Europe. It highlighted the risks to Russia gas flows to Europe from court cases and the expiry of the agreement with Ukraine at the end of the year.
• North Asian gas prices rose 5.1% in response to the reduction in LNG output at Freeport. They are now only 0.4% lower in July.