Liquefied Natural Gas (LNG) storage silo at the liquefied natural gas terminal operated by LNG Croatia LLC, in Krk, Croatia, on Monday, January 25, 2021.
Peter Santini Bloomberg | Getty Images
US natural gas prices rose to their highest level in more than 13 years on Monday as Russia’s war against Ukraine caused a global energy crash and forecasts predicted lower spring temperatures.
Futures jumped 8.5% to trade at $ 7.93 per million British thermal units, the highest level since at least October 2008. The jump is based on recent strength, with natural gas coming out for five consecutive positive weeks.
“With momentum that is firmly upward and the market unprepared to cope with any further upward shocks, significant continued gains for natural gas remain likely this summer,” said EBW Analytics. The company added that the “change of weather” has sent the US market in “exaggeration”.
For the year, natural gas prices in the United States have already risen by 102%, which contributes to inflationary concerns throughout the economy. This move is less extreme than in Europe, where natural gas futures have risen to record levels as the bloc struggles to move away from dependence on Russian energy.
The United States is now sending record quantities of liquefied natural gas to Europe, raising Henry Hub’s prices.
“Exports of liquefied natural gas have become more important with geopolitics and demand from both electricity production and industrial use is strong. “The role of the United States as an exporter continues to grow,” said RBC.
Against the background of the jump in prices, producers keep production under control, and stocks in warehouses are below the average for 5 years, according to RBC.
“It has a fundamentally constructive background, driven by record liquefied natural gas leaks, strong exports from Mexico and producer discipline,” the company added.
However, not everyone believes that the rally is here to stay. Citi has raised its target for the base price of Henry Hub for 2022 by 40 cents to $ 4.60 per million British thermal units, well below the current contract price.
“[A] The combination of factors may increase demand and slow production growth, but the market may overestimate their impact as prices have risen, “the company said.
Shares of natural gas producers EQT Corp. and Coterra Energy reached 52-week highs in trading early Monday, each jumping more than 4%. Range Resources is trading more than 3% higher.
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