Natural Gas Surges To Highest Prices Since 2008

( )- On Monday, the price of natural gas surged to its highest level in more than 13 years as Russia’s war in Ukraine and Biden’s war on domestic energy have caused production to slow and prices to skyrocket.

Futures rose ten percent on Monday, trading as high as $8.05 per million BTUs, the highest since September 2008. Prices then dropped slightly ending the day 7.12 percent higher at $7.82.

David Givens, head of natural gas and power services for North America at Argus Media told CNBC that the impact on North American natural gas markets from Russia’s war in Ukraine is likely to be “long-lasting.”

US natural gas prices are up 108 percent for the year, adding to inflation concerns throughout the US economy. But this increase is not as extreme as that in Europe where natural gas futures rose to record levels as European nations scrambled to shift away from their dependence on Russian energy.

The United States is now sending record amounts of LNG (liquified natural gas) to Europe, lifting Henry Hub prices.

As the price increases, producers have kept output under control, sending inventory in storage 17 percent below the five-year average.

According to OTC Global Holdings Senior Vice President and Chief Data Analyst Campbell Faulkner, the pressure on natural gas is being compounded by the battle between Asia and Europe for spare LNG cargoes that will inevitably divert supply away from the US west coast and New England heading into next winter.

However, the rally in prices may not be long-term. Citi only raised its base case Henry Hub price projection for 2022 by 40 cents to $4.60 per million BTUs, far below where the contract is currently trading.

Citi suggested that the market may be overestimating the impact of increased demand and slow production growth as prices surge.