LNG

Many US gas producers are hedging their output, as a cold winter combined with soaring LNG feedgas demand could drive the Jan-26 contract above $5.00/MMBtu. The Henry Hub Cal-26 strip could - under these conditions - jump above $4.25/MMBtu, Energy Aspects forecasts.

Strong global LNG demand has prompted Expand Energy to allocate up to $1.2 billion for drilling and completing rigs in the Haynesville Basin, 4% of its total drilling Capex. These monies spent cater for seven to nine new rigs as Expand Energy is the most cost-efficient player in the Haynesville, with a 12-month weighted average breakeven cost of $2.0/mcfe.

Trump trade policies could deeply impact global gas markets: “His opening salvo in a US-China trade war has been fired, with 10% tariffs on Chinese goods and retaliatory 15% tariffs on US LNG, while his stance on Russia remains unclear," Rystad Energy commented. Closer to home, Trump's 10% tariff on Canadian gas drives up prices, squeezes profit margins of smaller producers and could potentially lead to production cuts and delayed investments.

Dry gas production in the U.S. is about to reach a record of 81 Bcf per day, spurring LNG exports and pushing down prices. Henry Hub is seen average $2.99/MMBtu for the full year 2018, but notch up to $3.08/MMBtu in 2019.