An explosion took place in Texas on Wednesday. The fire caused at Freeport liquefied natural gas export terminal thereby threatens the supply chain for upcoming months.
As a result, prices of natural gas in the UK and Europe bounced up in the early trading session on Thursday.
However, the fire had caused a reverse impact on the prices of natural gas in the US on Wednesday.
Furthermore, the prices of natural gas in the UK jump up thereby reflecting that the news has impacted the most.
Though no casualties and injuries were reported and the situation is currently under control. However, the spokesperson of the company says that we might face a supply disruption for another three months.
Now here comes our crucial element, “production level”. If the same situation continues for two weeks, then we might face a supply disruption.
Production Capacity
Moving further, if we converse about the production level then from three trains Freeport produces approx. 2BCf/d natural gas. Moreover, the Freeport export terminal considers being the foremost and only liquefaction facility available for the US. Also, there are only two terminals in the world that use electric motors rather than turbines for completing the liquefaction process. However, out of those two-terminals one is Freeport which is already damaged right now.
Over the past month, the Freeport facility is running nearly at its maximum capacity, sources revealed. Therefore, one train is already taken off for repair and maintenance between the 5th and 22nd of April.
Analysts say that it is becoming very difficult for us to predict the impact in the international market. Meanwhile, natural gas is gaining strength and soon we will be seeing a sharp upside rally in the natural gas prices.
Recommendation
Natural gas trend is still bullish. We recommend our subscribers to go long in panic around 630 and add more lots in panic around 580 with stop loss below 500 on a closing basis for the upside target of 790.
We don’t expect Natural gas to go below 500 levels until and unless any major reversal comes out from developed economies.
For more day to day updates, stay tuned with us!