The U.S. port for exporting natural gas suddenly caught fire, and the equipment was burned. The amount of natural gas exported to Europe plummeted, while the U.S. gas reserves overstocked because the products can not exported.
Man-made or not, the result of the accident has been a very reasonable temporary drop in energy prices in the United States. Meanwhile, gas prices in Europe side are soaring and the gas shortage is even more severe.
The accident happened last week, and after the main export facility "exploded" and shut down, the US natural gas exporter announced yesterday that the Freeport LNG terminal will be closed for three weeks. The company has just issued an update , it now expects to restart partially within 90 days.
Freeport, located in the Gulf of Mexico, Texas, is one of the seven LNG export terminals in the United States, receiving about 2 billion cubic feet of natural gas per day, or accounting for about 16% of US LNG export capacity.
Freeport said, "At this time, it is not expected to complete all necessary repairs and resume full operations of the plant until the end of 2022. Partial operations will resume in approximately 90 days once safety and security are assured and all regulatory clearances are obtained."
Freeport has been in a shutdown since the explosion last Wednesday (June 8). The shutdown was initially expected to last at least three weeks, and with the time being significantly extended to March, the ability of the U.S. to export natural gas abroad has been significantly diminished, which is in favor of domestic U.S. gas supplies. However, this is clearly not good news for the European Union, which aims to break away from its dependence on Russian gas.
Freeport originally supplied most of its gas to Japan and South Korea, but after the outbreak of the Russia-Ukraine conflict, the U.S. began to increase its gas exports to Europe in order to help the EU break away from its dependence on Russian gas.
In the past few months, about 70 percent of Freeport's daily LNG has gone to the EU and the UK. France, Britain and the Netherlands are the top European importers of Freeport LNG this year, industry sources said.
Back in the early days of the explosion, analysts noted that if the Freeport LNG terminal shutdown was limited to three weeks, then it would not be a big deal, and Europe would have enough gas in storage to get through that time. But if the shutdown was months long, the impact could be much greater.
Therefore, the current natural gas can be said to be under control.
If it has fallen sharply, there may be news that it will be repaired and begin to operate ahead of time;
If it rise sharply, there will be news that the damage is serious and the operation will be delayed.
So, in the future, due to the great pressure of energy on high CPI, I do not know whether something will happen in energy prices, and the trend of natural gas may be even more uncertain.
Technically, it is not easy to digest the long black line of more than ten points of natural gas last night. It should be a double dip. After repeated shocks, the technical figure was established. Yesterday, the black line did not have a long shadow, and the receiving power is not enough, bullish friends must be careful.
Let's wait and see how the price of natural gas develops.
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