(Bloomberg) – U.S. natural gas prices fell after a fire broke out at a Texas export terminal, threatening to leave fuel supplies stranded in the U.S. domestic market despite strong demand foreign.
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The Freeport LNG terminal in Quintana, Texas, was closed after an explosion at 11:40 a.m. local time and will remain closed for at least three weeks, spokeswoman Heather Browne said by email late Wednesday. There were no injuries or risks to the surrounding community, and an investigation into the incident is ongoing, the company said in an earlier statement.
Freeport is one of seven US liquefied natural gas export terminals, which receive the gas through a pipeline and liquefy it before loading the superchilled fuel onto tankers. The terminals have helped the United States emerge in recent years to rival Qatar and Australia as the top LNG exporter. As Europe clamors for cargo after Russia invaded Ukraine, the blaze could have a significant impact on global fuel supplies.
U.S. natural gas futures for July delivery fell 6.1% to $8.169 per million British units at 8:31 a.m. in Singapore after closing down 6.4% in the previous session . The crisis halted a rally that had sent prices to new highs 13 years earlier. Prices have more than doubled this year as US gas inventories remain well below normal levels.
The blaze “will reduce exports and ease some of the pressure on U.S. supplies,” said John Kilduff, a partner at New York-based hedge fund Again Capital. US consumers “should benefit from lower prices, but Europe and Asia will likely pay higher prices,” he said.
See also: US now sends most of its export gas to Europe
Freeport receives about 2 billion cubic feet of gas per day, or about 16% of total US LNG export capacity. The tanker Elisa Larus is currently at the terminal, although it is under way with its engine on, according to ship tracking data compiled by Bloomberg. This suggests the tanker may be moving away from Freeport.
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