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Friday Energy Update 1/2/24

Simon van Os


Business Efficiency

Volatility looked to have returned to the wholesale market earlier this week. This was because of fears surrounding the future of US LNG due to a stall in new LNG projects in the context of a hostile Suez delivery route and climate change – this has the potential to squeeze European imports and the US are one of the UK’s largest suppliers of LNG.

This was in addition to the news on Monday of a month-long outage at the Freeport LNG terminal in Texas (one of Three). Coupled with potential escalation in the Suez Canal conflict. It caused quite a concern and together it could see prolonged increases returning, particularly if a freezing weather event occurs and European storage continues to dwindle for example bringing pressure back into the supply fundamentals.

However, the market hasn’t reacted any further over the last two days with very light decreases today. So it seems to have eased from the initial fears, although in part also due to UK & Norway plant maintenance concluding and lifting supply volumes.

The US House of Representatives is also set to hold a vote over the next couple of weeks that could overturn the governments freeze on the development of new LNG export infrastructure that was announced last Friday.

If it is overturned then that minimises in part one of the two scenarios causing some concern currently.

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