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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Natural Gas Trading Picks Up Considerably Amid High Volatility

  • Strong demand and heightened volatility have boosted natural gas trading.
  • Banks and oil companies are beefing up their trading desks.
  • Natural gas has come to the focus of attention once again amid Europe's energy crunch.

Natural gas trading activity in the United States has picked up considerably amid heightened price volatility and indications of strong demand thanks to the European energy crunch.

This is according to trading industry insiders quoted by Reuters in a report that also notes the recent sharp swings in natural gas prices and the EU's scramble to find replacements for Russian gas.

As a result of these developments, according to unnamed Reuters sources, TD Bank is ramping up its natural gas trading desk, as is at least one investment fund, while others are opening up gas trading desks, including refiner Philips 66.

"A significant driver to this growth is the outsized returns a lot of these trading shops saw in 2021," the managing director of recruiter Aurex Group, David Byrne, told Reuters.

"We are investing in our energy sales and trading capabilities while equally committed to a comprehensive offering to help our clients transition to a low carbon economy," the global head of commodities at TD Bank told Reuters.

Natural gas has come to the focus of attention once again amid Europe's energy crunch that began last year amid tight supplies of the fuel and became a lot more severe this year after Russia's invasion of Ukraine. The EU has declared that it plans to completely stop buying Russian gas within a year and is currently in a frantic search for alternatives.

U.S. LNG is one of the most obvious ones, and this week, industry executives hosted several EU member-state delegations in Texas, following President Biden's pledge of at least 15 billion cu m in additional U.S. LNG volumes for Europe this year.

"The situation in Europe is so precarious. All these countries that are dependent on Russian gas are committed to giving it up, in some cases completely," said Fred Hutchinson, the chief executive of trade body LNG Allies.

However, the executive admitted that building new LNG capacity will take years, and there won't be much new export capacity until about 2025. "The capacity challenges in 2022 are great but the opportunities in a few years are really terrific," he said.

By Charles Kennedy for Oilprice.com

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