US natural gas prices tumbled after a fire broke out at a Texas export terminal, threatening to leave supplies of the fuel stranded in the domestic American market despite surging overseas demand.
Freeport LNG’s terminal in Quintana, Texas, has been shut down after an explosion at 11:40 a.m. local time and will remain closed for at least three weeks, spokeswoman Heather Browne said late Wednesday by email. There were no injuries or risks to the surrounding community, and an investigation on the incident is ongoing, the company said in a previous statement.
Freeport is one of seven US liquefied natural gas export terminals, which receive gas via pipeline and liquefy it before loading the super-chilled fuel onto tankers. The terminals have helped the US emerge over the past few years to vie with Qatar and Australia as the No. 1 exporter of LNG. As Europe clamors for cargoes after Russia’s invasion of Ukraine, the blaze could have a significant impact on global supplies of the fuel.
US natural gas futures for July delivery fell 6.1% to $8.169 per million British units as of 8:31 a.m. in Singapore after closing down 6.4% in the previous session. The slump halted a rally that sent prices to fresh 13-year highs earlier. Prices have more than doubled this year, as US gas stockpiles remain well below normal levels.
The fire is “going to curtail exports and alleviate some of the strain on US supplies,” said John Kilduff, a partner at hedge fund Again Capital in New York. US consumers “should benefit from lower prices, but Europe and Asia will probably pay higher prices,” he said.
Freeport receives about 2 billion cubic feet of gas per day, or roughly 16% of total US LNG export capacity. The tanker Elisa Larus is currently at the terminal, although it’s under way using its engine, according to vessel tracking data compiled by Bloomberg. That suggests the tanker may be moving away from Freeport.
