Fri, February 23, 2024

Natural gas prices ease after hitting a 13-year high

Natural gas

On Tuesday, natural gas prices declined after touching a record high in the previous session as Russia’s invasion of Ukraine triggered a global supply crunch.

Futures tied to the commodity declined 3.38% or 0.26 points to $7.56 per million British thermal units.

The March contract negatively traded from an upturn of 10.00% to $8.05 MMBtu yesterday, the highest since 2008. The last jump came off from five straight positive weeks.

For this year, US natural gas prices skyrocketed 108.00%, reflecting another inflationary concern across the economy.

On the other hand, the rally in the energy product is less extreme in Europe. Still, the commodity has risen as the area scrambles to move away from dependence on Moscow’s output.

Correspondingly, the United States sent record amounts of liquefied natural gas (LNG) to the region. This effort has lifted Henry Hub prices.

In line with this, LNG exports have grabbed more significance with geopolitics. In addition, its demand for power generation and industrial usage remained robust.

Consequently, the role of the US as a key exporter continues to increase. Experts noted a fundamentally constructive backdrop driven by record LNG outflows. They also cited strong Mexican exports and producer discipline.

Analysts anticipated the long-lasting impact of the ongoing geopolitical conflict in eastern Europe. This projection would greatly affect the North American natural gas markets.

At the same time, the previous spike reflects the expectation of higher demand due to the bullish weather shift. The unseasonably cooler temperatures overdrive US markets.

Moreover, the inventory in storage is currently 17.00% lower than the five-year average. Then, another pressure came from the battle between Asia and Europe for extra LNG cargoes.

Denmark to hike natural gas output

Meanwhile, Denmark plans to temporarily increase its natural gas output to aid Europe to wean itself off the Kremlin energy.

The Nordic country is the EU’s eighth-largest gas producer. Its production will make the state more than self-sufficient with natural gas in the following year.

Furthermore, the government intends to increase output to help the rest of Europe in its plans to drop Russian gas. Overall, they forecasted that production would climb by 247.00% in 2025, from 2021 levels.

Similarly, nations including Germany, Greece, and Italy also aim to develop new import terminals for LNG.

In support of greener energy, Denmark also plans to quadruple the production of solar and onshore wind energy by 2030. The state will also give subsidies to help households switch to green gas heating systems.

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