LNG traders in US face a new reality: Expansion exhaustion

Bloomberg

Welcome to the new world market for natural gas, where computers never sleep and, apparently, neither do traders.
With US liquefied natural gas (LNG) exports set to surge by almost 80 percent in 2019, traders in America face a new reality: expansion exhaustion. As more and more inte- rnational players participate in US gas markets, the price of market security is eternal vigilance.
John Kilduff, a New York-based hedge-fund manager, has learned that you can’t rest on the increasingly volatile US Henry Hub gas market. On November 14, Kilduff logged on at his usual 3 am Eastern time and, instead of being able to log off again and catch a nap before his normal workday, he watched prices jump to a four-year high in just two hours.
“This is a 23-hour-a-day market now, and you have to be on top of it,” Kilduff, a partner at Again Capital LLC, said in a telephone interview.
In 2018 so far, with gas increasingly seen as a cleaner alternative than coal at a time of global warming, trading volume of benchmark US gas futures is up 15 percent in Asia and 25 percent in Europe.
Natural gas trading went electronic in a big way just under two years ago, when the New York Mercantile Exchange commodity pits in lower Manhattan were shut down, eliminating the rings of buyers and sellers flinging their orders on cards to goggle-wearing middlemen whose aprons were physically attached to the pits.
Taking over was CME Group Inc’s Globex electronic system, at a time of dramatic change in the US energy picture.
By that point, the shale boom had begun greatly boosting the amount of US natural gas produced. Meanwhile, Cheniere Energy Inc had successfully started up the first liquefied natural gas export terminal in the lower 48 states able to send cargoes worldwide on supertankers. A record 32 tankers left US LNG terminals last month.
With US gas increasingly becoming a global fuel, Kilduff is among a growing group of Americans now finding themselves glued to their electronics, struggling to keep up no matter the hour. “I blame the millennials that have come in the market for that primarily,” Kilduff said, jokingly. “Look at the rise of electronic trading.”
Trafigura Group Ltd, the world’s top independent LNG trader, reported that its delivered volumes of the fuel jumped 22 percent in the year ended on September 30 from a year earlier, driven largely by rising sales in China and South Korea. Cheniere Energy Inc said it shipped the first LNG cargo from the company’s facility in Corpus Christi, Texas, which has become the third terminal in the US to export shale gas.