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European gas prices soar after fire at US facility

Natural gas prices around Europe surged after a fire at a large export terminal in the US, wiping out deliveries to a market that is already unstable over tight Russian supplies.

The explosion occurred at a Texas liquefied natural gas plant on Wednesday. The Freeport LNG export facility will remain closed for at least three weeks, a company spokesperson said.

Almost a fifth of all overseas shipments of gas from the US went via the terminal last month.

The United States sent nearly three quarters of its LNG to Europe in the first four months of the year, with the region now getting almost half of its supplies from across the US. Most European countries have been attempting to wean themselves off Russian gas following Russia’s invasion of Ukraine, but remain dependent on it for the time being.

The closure of the Texas terminal coincides with a period when pipeline supplies from Europe’s top providers are also capped. Prime facilities in Norway are undergoing annual maintenance this week.

“An export halt during the high demand winter months would have triggered a much bigger reaction, but the event highlights Europe’s precarious situation and it would likely signal an end for now to the calm trading seen in recent weeks,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Despite relatively low consumption in most of Europe amid mild weather energy companies may have to deploy gas inventories, which is convenient as storage levels have improved recently, getting closer to historic averages.

However, LNG buyers will still likely seek out replacement shipments from the spot market, although available supplies have been on the wane, according to traders in Asia. This would probably lead to a further intensification of competition for the fuel between Asia and Europe.

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