U.S. Commodity Futures Trading Commission Report

Yesterday the staff of the Market Intelligence Branch of the Division of Market Oversight of the U.S. Commodity Futures Trading Commission (CFTC) issued a report assessing the market impacts from expanding LNG trade and exports. The report can be found in PDF format here.

According to the CFTC the three main takeaways of the report are:

1. Global LNG trade growth is expected to continue with U.S. LNG exports having the most rapid growth rate and a competitive price advantage.

2. U.S. LNG export growth may put upward pressure on U.S. natural gas prices and expose a heretofore relatively isolated North American market to global market dynamics.

3. Burgeoning U.S. LNG exports are affecting global LNG market dynamics, including contracting and risk management practices in CFTC regulated markets.

“Over $30 billion in construction capital has been invested by the two firms with operational LNG plants. Further, significant investments in support of these plants have been made in new natural gas pipeline assets. The LNG firms and their customers use CFTC regulated futures and swaps to manage investment, commodity, and operational risks. It is important for the CFTC and the public to understand the changing physical market dynamics. In this regard, the CFTC must foster stable, vibrant, and liquid derivatives markets to support risk management practices,” according to Amir Zaidi, Director of the CFTC’s Office of Market Oversight.