U.S. LNG Building Boom Could Play Out Poorly, Shell CEO Says — Barrons.com

Dow Jones Newswires

By Avi Salzman

One of America's hottest energy investments — liquefied natural gas — looks like it's on the brink of oversupply, and companies that are plowing money into it could run into financial difficulty in the years ahead.

Energy companies have been approving new LNG plants in Louisiana and Texas at a frenzied pace, with the backing of the Trump administration. At least five new or expanded plants to turn dry natural gas into liquid form and ship it overseas have gotten the green light for construction this year, and several more could be approved by the end of the year.

But companies are building so many facilities, at a time of rising supply- chain inflation, that they may have trouble selling their product at a profit when they open, said Shell CEO Wael Sawan in an interview with S&P Global Vice Chairman Daniel Yergin at the Economic Club of New York on Monday night. "The number of final investment decisions being taken surprises me if I'm honest, because it's at the higher end of the cost curve, yet those capacities continue to come in," he said. "So it's not economically fully rational."

Sawan would know — Shell buys more U.S.-produced LNG than any other company, and sells it all over the world. He was responding to a question about Shell's plans to expand its LNG Canada terminal in British Columbia that it opened this year. The company is considering an expansion, but it will depend on how much competition it sees from other players, including in the U.S., and how much it will cost for an engineering firm to construct the plant. Shell doesn't want to open a new plant just as oversupply hits the market.

Sawan didn't single out any companies that are adding LNG capacity. Among the firms that have announced final investment decisions for plants in the U.S. this year are Sempra Energy, NextDecade, Cheniere Energy, Venture Global, and Australian company Woodside Energy.

In total, companies have announced final investment decisions on enough capacity to ship 75.2 billion cubic meters of LNG per year, more than any year in history and almost as much as was approved from 2020 and 2024 cumulatively, according to the International Energy Agency. Last year, the U.S. shipped 123 billion cubic meters.

Shell is very bullish on LNG, projecting that global demand will grow 60% by 2040. But there will be several ups and downs in the market on the way to that milestone, Sawan said in a discussion with Barron's after delivering his talk at the Economic Club. Deciding when to open a new facility is crucial. Opening when prices are weak means that companies may not be able to sell their LNG profitably.

Today, LNG sells for about $11 per million British Thermal Units overseas. "Some of these [new LNG] projects will not make money if LNG prices are at $7 or $8," Sawan said. "Which means they're not the most economically rational ones to get into first."

Sawan said that Shell will probably make a decision about expanding the LNG Canada project next year.

Write to Avi Salzman at avi.salzman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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Hogs Back Down to Close 3Q — Market Talk

Dow Jones Newswires

Bloomberg Commodity Index Futures DEC5

-0.95%

Lean hog futures on the CME close down 1.8% to 88.825 cents a pound, finishing off 3Q with a loss. Supply indicators appear to be building, including higher hog weights, says livestock trader Dan Norcini. "Hog weights are seasonally climbing which will add more pork to the pipeline with the seasonal tendency for both pork and hog prices to start weakening this coming month of October," he says. Norcini adds that trader positioning in hog futures also has many traders unwilling to bid the futures contract up. Live cattle close up 0.4% to $2.35 a pound. (kirk.maltais@wsj.com)

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Cotton Hovering Near Five-Month Low

Trading Economics

Bloomberg Commodity Index Futures DEC5

-0.95%

Cotton futures rose slightly to above 63 cents per pound on Tuesday, but prices remained near a five-month low as the market grappled with ongoing uncertainty.

Traders were cautious ahead of a potential US government shutdown, which would halt key economic data releases, including USDA reports on crop conditions and employment.

The USDA’s latest crop progress report showed that 47% of US cotton was in good to excellent condition for the week ending September 28, unchanged from the previous week but well above 31% a year earlier.

The cotton harvest reached 16%, in line with the five-year average, while export sales rose by only 86,100 bales, down more than 50% from previous levels, highlighting weak demand.

Meanwhile, markets were also watching the potential impact of Hurricane Humberto and Tropical Storm Imelda on agriculture and energy infrastructure.

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Soybeans Slide on Weak Demand

Trading Economics

Bloomberg Commodity Index Futures DEC5

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Soybean futures slipped to $10 per bushel, hovering near mid-August lows, as steady harvest progress, reduced Chinese buying, and weak export momentum kept prices under pressure.

The USDA reported soybean stocks at 316 million bushels as of September 1, slightly below expectations and down from 342 million a year earlier, with domestic crushers absorbing much of the supply.

Still, export demand remains sluggish, with China largely absent from the US market as it sources more from South America.

Harvest activity also weighed on sentiment, with 19% of the crop completed as of Sunday and warm, dry weather expected to accelerate fieldwork further.

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Front Month ICE Brent Crude Fell 2.34% This Quarter to Settle at $66.03 — Data Talk

Dow Jones Newswires

Bloomberg Commodity Index Futures DEC5

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Front Month ICE Brent Crude for Nov. delivery lost $1.58 per barrel, or 2.34% to $66.03 this quarter

Down for two consecutive quarters
Down $8.71 or 11.65% over the last two quarters
Largest two quarter net and percentage decline since the fourth quarter of 2024
Down four of the past six quarters
This month it is down $2.09 or 3.07%
Down for two consecutive months
Down $6.50 or 8.96% over the last two months
Largest two month net and percentage decline since May 2025
Today it is down $1.06 or 1.58%
Down for two consecutive sessions
Down $4.10 or 5.85% over the last two sessions
Largest two day dollar and percentage decline since Tuesday, June 24, 2025
Lowest settlement value since Monday, Sept. 8, 2025
Off 19.51% from its 52-week high of $82.03 hit Wednesday, Jan. 15, 2025
Up 9.63% from its 52-week low of $60.23 hit Monday, May 5, 2025
Down 10.24% from 52 weeks ago
Off 19.51% from its 2025 settlement high of $82.03 hit Wednesday, Jan. 15, 2025
Up 9.63% from its 2025 settlement low of $60.23 hit Monday, May 5, 2025
Off 54.80% from its record high of $146.08 hit Thursday, July 3, 2008
Year-to-date it is down $8.61 or 11.54%

All prices are calculated based on the settlement price of the current front month contract.

Source: Dow Jones Market Data

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Wheat Futures Fall to 3-Week Low on Record Stockpiles

Trading Economics

Bloomberg Commodity Index Futures DEC5

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Wheat futures dropped below $5.10 per bushel on Tuesday, the lowest since September 8, after a bearish US Department of Agriculture quarterly stocks report pointed to larger-than-expected supplies.

Wheat stocks were reported at a five-year high of 2.120 billion bushels as of September 1, well above last year’s 1.992 billion.

The USDA also revised US wheat production upward to 1.985 billion bushels from 1.927 billion, adding further pressure on prices.

The larger supply outlook overshadowed demand concerns and drove futures lower across the major contracts.

Market sentiment was also weighed down by broader caution ahead of a potential US government shutdown.

Overall, the combination of record stockpiles and higher production estimates weighed heavily on wheat prices.

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Front Month Nymex Natural Gas Fell 4.43% This Quarter to Settle at $3.3030 — Data Talk

Dow Jones Newswires

Bloomberg Commodity Index Futures DEC5

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Front Month Nymex Natural Gas for Nov. delivery lost 15.30 cents per million British thermal units, or 4.43% to $3.3030 per million British thermal units this quarter

Down for two consecutive quarters
Down 81.60 cents or 19.81% over the last two quarters
Largest two quarter net and percentage decline since the first quarter of 2024
This month it is up 30.60 cents or 10.21%
Largest one month net and percentage gain since Feb. 2025
Snaps a two month losing streak
Up 12 of the past 18 months
Today it is up 3.60 cents or 1.10%
Up for six consecutive sessions
Up 49.70 cents or 17.71% over the last six sessions
Largest six day dollar and percentage gain since Monday, May 5, 2025
Longest winning streak since Thursday, Sept. 4, 2025, when the market rose for seven straight sessions
Highest settlement value since Monday, July 21, 2025
Off 26.45% from its 52-week high of $4.491 hit Monday, March 10, 2025
Up 46.28% from its 52-week low of $2.258 hit Friday, Oct. 18, 2024
Rose 14.05% from 52 weeks ago
Off 26.45% from its 2025 settlement high of $4.491 hit Monday, March 10, 2025
Up 22.51% from its 2025 settlement low of $2.696 hit Monday, Aug. 25, 2025
Off 78.52% from its record high of $15.378 hit Tuesday, Dec. 13, 2005
Year-to-date it is down 33.00 cents or 9.08%