Chill

Up goes the curtain. The show is on. In the jazz stakes, Trump’s second go at an inauguration was a mere Snoop Dog and a blast of dry ice short of a Super Bowl half-time show, as politicians and Wall Street rubbed shoulders, swapped smouldering looks and checked their Instagram. Topping it off was a run on by the world’s richest billionaire showing the sort of form that would have any top level boxer cooing approval. “I’ll have a pint of whatever that man is having“. Etc. That the whole fandango was inside is a point of note. The US, like much of the Northern Hemisphere is cold. Brass monkeys cold. Hence demand for natural gas hit a record high in the US yesterday. In the UK too, there are warnings of an unimaginably bleak ‘brown out’, and demand for more imports at a time when Europe itself is suffering from an equally bleak dunkelfaute. Bid it up. And yet the bullish outlook for US natural gas, rests not so much on the vagaries of the weather, and more on the rapid expansion of LNG export capacity. As facilities ramp up, so goes demand for gas; gas to send out to markets in Europe and Asia where prices trade at a significant premiums. LNG export facilities are expected to double over the next three years, although analysts whisper even this will prove conservative. In order meet this demand, higher prices will be needed. Gordon Huddleston, President of Aethon Energy, recently let slip that Henry Hub prices “will need to exceed $5” to drive significant development, while Nick Dell’Osso, the big boss of Expand Energy was a more measured, suggesting that prices need to be “materially higher”. So say the insiders. And then last night news hit the wires that the President was going all in on a massive build out of AI infrastructure. Data centres. And what do data centres need? Power. Lots and lots of power. And all this at a time when the growth of shale production is starting to flare.