The surge was led by liquefied gas producers after the European Union announced that it would purchase energy from the United States for $750 billion as part of the newly-unveiled trading framework.
This deal represents a significant deepening in transatlantic energy relations at a moment when the EU is gradually phasing-out Russian imports.
After months of negotiations, the EU has finalised a comprehensive trade agreement that includes commitments to purchase US nuclear fuel, oil and gas during President Donald Trump’s term.
The group also committed to increasing overall investments in the United States of $600 billion.
The European Commission’s Ursula von der Leyen, President of the European Commission, confirmed that Trump will spend $750 billion on energy over three more years. This is $250 billion each year.
This agreement also includes investments related to nuclear energy.
Von der Leyen stated, “This is the way we can replace Russian energy.”
NextDecade Venture Global gains as the demand outlook improves
Following the announcement, shares of US companies that produce liquefied gas rose dramatically.
NextDecade Venture Global and Cheniere Energy all gained between 5 and 7 percent in the premarket.
Energy Fuels, a uranium-mining company, also rose 4% in price to $10.42. This is largely due to optimism about increased sales of nuclear fuel.
Oil benchmark Brent gained 1.5%, and WTI and Expand Energy each added over 1.5%.
In 2023 the US will surpass Qatar and Australia as the top LNG exporter.
After sanctions against Russian energy exports the demand for LNG in Europe has risen, and the US is filling the gap.
Tariffs softer, but price risk for the long term
Investors had expected a 30% tariff, but the deal only imposes 15%.
Analysts believe that the lower tariff level could soften the impact on transatlantic trade as well as industrial production.
In a Reuters article, Ashley Kelty said that the EU-US trade agreement was at the top of everyone’s minds. The 15% tariff rate is better than expected (30% had been suggested previously).
This should reduce the drag of industrial activity in both countries.
Kelty has warned, however, that the energy provisions of the agreement could have an impact on gas prices in case a glut occurs.
She said that the demand from the EU for more US energy would lead to more US LNG being imported in future.
Morgan Stanley expects NextDecade to continue growing.
Morgan Stanley has raised the price target of NextDecade from $10 to $15, due to improved regulatory conditions.
By mid-September, the firm anticipates that final decisions on investment and funding for its fourth and fifth LNG trains will be made at the Rio Grande facility in Texas.
Once fully operational, the facility will be able to produce 48 million tonnes of steel per annum. This makes it the biggest in the world.
The post US LNG Stocks Rally as EU Commits $750B for American Fuel Imports may change as new developments unfold.
