Analysts: Trump’s Mexico Feud Could Hurt Nat Gas Pricesby Will Brackett
Analysts at Tudor Pickering Holt & Co. and Again Capital LLC are warning that U.S. natural gas prices could fall up to 40 percent if President Donald Trump’s feud with Mexico develops into an all-out trade war. Mexico has become a significant destination for U.S. natural gas exports via pipelines and the analysts are warning that price could fall below $2 per MMBtu if those exports were halted due to a trade dispute.
The analysts say that although they are not anticipating that shipments of U.S. natural gas to Mexico will be cut off, they are looking for signs that the exports are being disrupted. Up to 5 percent of the natural gas produced in the U.S. in 2016 was exported to Mexico via pipelines that cross the border.
Mexican demand for U.S. natural gas has grown substantially in recent years as Mexico seeks to use more of the fuel for electric power generation at the same time that its domestic production has been falling.