Natural gas futures continued to slide early Wednesday as traders mulled potential impacts to LNG exports from a reinstated pollution rule affecting two major U.S. terminals. 

NGI Morning Natural Gas Price & Markets Coverage

After plunging 64.1 cents in Tuesday’s trading, the October Nymex contract was down another 12.6 cents to $8.019/MMBtu at around 8:55 a.m. ET.

Selling in Tuesday’s session occurred in part amid concerns over an Environmental Protection Agency (EPA) decision not to waive an emissions limit requirement for turbines at Cheniere Energy Inc.’s liquefied natural gas facilities.

Cheniere said it disagrees with the EPA decision but “will work with our state and federal regulators to develop solutions that ensure compliance.” The rule could “result in unwarranted expenditures,” but “we believe that the steps needed to come into full compliance will not result in a material financial or operational impact.”

October prices were “already nosediving” before the market was “spooked” by news that the EPA would require the LNG export terminals to “comply with long-dormant emissions standards,” EBW Analytics Group analyst Eli Rubin said.

“With immediate impacts from Cheniere unlikely, a near-term bounce is possible for Nymex gas after testing support near yesterday’s lows,” Rubin added. 

Tudor, Pickering, Holt & Co. (TPH) analysts similarly saw little reason to expect any interruptions to service at Cheniere’s export terminals in the immediate term as a result of the EPA decision.

“The company has 62 affected gas turbines at its facilities that had national emission limit waivers over the past 18 years, which were recently lifted by the EPA,” the TPH analysts said in a note to clients Wednesday. “…We see it unlikely that the EPA will mandate broad, immediate service interruptions to comply with the Clean Air Act should testing reveal Cheniere’s turbines are noncompliant.”

This is in part because of the Biden administration’s stated commitment to supply Europe with more LNG, the TPH analysts said. 

Any needed work to bring equipment into compliance “could be done over time during planned maintenance to mitigate operational impacts,” they added.

Meanwhile, the technical outlook suggests prices could dip into the low- to mid-$7.00 range if bears are able to send prices below a key support level at $7.87 on a closing basis, according to EBW’s Rubin.

“The October contract’s loss of $1.31 in three days to under $8.00 early this morning retraces almost half of the $1.76 gain during the last three weeks of August,” Rubin said. “Although further extended declines are possible, fundamentals are soft, and volatility is likely, support for Nymex gas prices may emerge within the next seven to 10 days.”