Coronavirus demand destruction cuts U.S. LNG exports to 13-month low
Worldwide LNG prices collapsed to record lows in Europe and Asia in recent weeks due to oversupply of natural gas, even though consumption has remained stronger than that of travel restriction-depressed gasoline.
U.S. prices are less favorable than in the past, making it less attractive for overseas buyers. Buyers in Asia and Europe have canceled over 20 U.S. LNG cargoes for both June and July, with more anticipated.
The amount of gas flowing to U.S. LNG export plants fell to 3.7 billion cubic feet per day (bcfd) on Monday and was on track to fall further on Tuesday, according to data from Refinitiv.
“We’ve been bearish on U.S. LNG feed gas demand, but yesterday’s level still caught us by surprise,” U.S. financial services firm Tudor, Pickering, Holt & Co said in a note.
U.S. gas futures at the Henry Hub in Louisiana have traded higher than European benchmarks since the end of April and were expected to remain more expensive through at least September.
Cheniere Energy Inc’s U.S. LNG export terminals at Sabine Pass in Louisiana and Corpus Christi in Texas saw the biggest fall in flows. Cheniere, the biggest U.S. LNG exporter, said it does not comment on its operations.
LNG feedgas flows hit a record 8.7 bcfd in February before most government-imposed lockdowns.
Analysts at Energy Aspects said they expect around 125 U.S. cargoes to be shut-in this summer.
“We expect underutilization of U.S. terminals to continue for several summer months as margins remain negative for many companies,” said Wood Mackenzie research director Robert Sims.
Reporting by Scott DiSavino; Editing by Tom Brown and Steve Orlofsky
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