Natural gas surges 9% to hit 14-year high in US
• Domestic natural gas production is slow during restocking season
• Mounting overseas demand is also helping in price hike
Natural gas prices in the US jumped above $8 per metric million British thermal units (MMBtu), hitting a nearly 14-year high, on growing concern that stockpiles of the power-plant fuel will fall short of demand this summer.
Henry Hub prices jumped more than 9% to $8.14 per MMBtu during morning trading on Wall Street, the highest since September 2008.
The current rally is a result of several factors, including an increase in export demand, mitigated US supply response, and rising coal prices.
In addition, production is down in the US, and gas in storage is 21% lower than last year.
Moreover, the price increase is unusual, as in the past, the price of natural gas spikes tended to be triggered by higher demands during cold weather or lower supplies during Gulf of Mexico hurricanes.
The post-pandemic consumption bump, soaring overseas demand, and a muted output response from domestic shale drillers are driving price escalation.
“We have seen domestic demand for power and industrial sectors continue to grow despite much higher natural gas prices,” Alan Armstrong, CEO of pipeline operator Williams Co, said Tuesday in a conference call with analysts.
“It has been somewhat surprising to us how inelastic this demand has remained.”
Picture Credit: FT
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