Fall in US gas hub liquidity hampers derivatives market

Surging shale gas production in the northeast US has undermined Platts’ Gulf Coast indexes and derivatives contracts that rely on them

Gas pipeline

Natural gas trading hubs along the US Gulf Coast have suffered a plunge in liquidity in the last five years, according to data from New York-based price reporting agency Platts – a trend that is causing difficulties for derivatives contracts tied to prices at those locations.

Analysts say the root cause of the shift is the shale revolution, which has caused production to surge in the northeast US and reduced the importance of the Gulf Coast's decades-old natural gas infrastructure to producers

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