Shell’s (NYSE:SHEL) liquefied natural gas trading division tallied a ~$900M loss in Q3, after traders were caught by a sharp rally in European gas prices when Russia halted supplies, Reuters reported Thursday.
Shell (SHEL) – the world’s biggest LNG trader – does not disclose its trading results, but it said Q3 results were hurt by weaker gas trading result even as it reported its second highest all-time quarterly profit of $9.45B.
The loss was the result of a wrong bet on the difference between benchmark Asian and European gas prices during the summer months, according to the report.
European gas prices reached an all-time high of nearly $90/MMBtu on August 22 as the region scrambled to secure gas supplies after Russian halted pipeline gas deliveries; the rally in European prices far exceeded Asian prices, leading to a collapse in the spread between the two.
The value proposition for Shell (SHEL) remains strong as the company continues to enjoy record profitability and distributes much of its “windfall earnings” to shareholders, Cavenagh Research writes in an analysis published recently on Seeking Alpha.
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