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Gas hubs. Why are they interesting? – Crude Oil – 4 July 2023

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Gas hubs are central points in a natural gas market where multiple gas suppliers and buyers come together to trade and exchange natural gas. Gas hubs are interesting because they serve as a physical and financial marketplace for buying and selling natural gas, enabling efficient and transparent transactions between market participants.

Gas hubs’ mission

Gas hubs play a crucial role in Liquefied natural gas (LNG) trading by facilitating the supply and demand balance, price discovery, and market liquidity. Liquefied natural gas (LNG) is a form of natural gas that has been converted into a liquid state for easier storage and transportation.

The liquefaction process involves cooling natural gas to approximately -162 degrees Celsius (-260 degrees Fahrenheit), at which point it condenses into a liquid state. This extreme cooling is necessary to reduce the volume of the gas by about 600 times, making it more practical for storage and transportation.

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Transporting LNG involves loading the liquefied gas onto specialized cryogenic tankers. These tankers are typically double-hulled vessels with advanced insulation to prevent heat transfer and maintain the low temperature of the LNG.

My solutions on MQL5 Market: Vladimir Toropov’s products for traders

Gas hubs serve as a link between the gas market and the LNG market, providing the necessary infrastructure, pricing mechanisms, and liquidity for efficient LNG trading.

Some well-known gas hubs include the Title Transfer Facility (TTF) in the Netherlands, the National Balancing Point (NBP) in the United Kingdom, the Henry Hub in the United States, and Japan Korea Marker (JKM) in Northeast Asia.

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Gas hubs and pricing

Last year gas prices averaged $41/MMBTU on TTF, $34 on JKM, and $7 on Henry Hub. Now the cost of raw materials has fallen triple: gas is traded on TTF at $11.9, JKM at $12, and Henry Hub at $2.6.

MMBTU is a thermal unit of measurement for Natural Gas. It often measures LNG. You need to multiply the value in MMBTU by 35.8 to convert MMBTU into dollars per thousand cubic meters.

My solutions on MQL5 Market: Vladimir Toropov’s products for traders

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