LNG in World Markets: Small Traders Struggle with LNG Price Levels, Volatility

September 2021

Record gas prices in Europe and Asia and volatile inter-basin spreads are making intense financial demands on traders to cover variation margin calls related to JKM derivatives hedging. Some smaller players are being frozen out of the market due to insufficient credit lines as the price-tag of individual cargoes has ballooned past $100 million. The two issues are distinct, but both arise from the unprecedented price volatility and outright high price levels in today’s market. The first dynamic is potentially the more worrisome for smaller players stuck with paying down escalating margin calls on hedges triggered by steep price gains

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