A pair of natural gas deals recently signed by Russia and China could price U.S. LNG exporters out of the vital Asian market, according to a new analysis by author and Christian Science Monitor columnist Kurt Cobb. Cobb writes that the new gas supply deals could lock in prices for LNG delivered to Asia between $10 and $11 per million Btus. LNG exports to Asia from the U.S. would not be reliably profitable at that rate, since the cost of liquefying and shipping LNG averages $6 per million Btus. The Henry Hub natural gas price is expected to hover around $4 per million Btus for the long term.
Meanwhile, the unseasonably cold fall weather that has gripped much of the U.S. for the past few weeks is pushing up natural gas prices even as oil continues to decline. Via the Houston Chronicle, a decrease in oil production driven by low oil prices also reduces the supply of associated gas, thereby boosting natural gas prices. The cold weather sent natural gas up 13 cents to $4.37 on Wednesday.
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