NEW YORK: US natural gas futures rose almost 4% to a fresh one-week high on Monday on forecasts for colder weather and higher demand next week than previously expected and an 11% jump in European gas prices that should keep US liquefied natural gas (LNG) exports near record highs.
Gas prices in Europe soared to their highest since hitting a record in early October on rising demand expectations and renewed concerns that Russia will hold back gas exports to Europe over delays to the startup of Gazprom PAO’s Nord Stream 2 gas pipe from Russia to Germany.
US Secretary of State Antony Blinken said on Sunday that gas is unlikely to flow through Nord Stream 2 if Russia renews its aggression against Ukraine.
Front-month gas futures was up 14.8 cents, or 3.8%, to $4.073 per million British thermal units (mmBtu) at 8:14 a.m. EST (1314 GMT), putting the contract on track for its highest close since Dec. 3 for a second day in a row. Before the latest price increase, speculators had cut their net long positions on the New York Mercantile and Intercontinental Exchanges for a second week in a row last week to their lowest since June 2020 on expectations the United States will have more than enough gas for the winter heating season.
In recent months, global gas prices hit record highs as utilities around the world scrambled for LNG cargoes from the United States and elsewhere to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China.
US futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter. Overseas prices were currently trading about 10 times higher than US futures.
Analysts have said European inventories were about 20% below normal for this time of year, compared with just 3% below normal in the United States.
Looking ahead, many analysts said milder-than-normal weather expected in the coming weeks will allow US utilities to leave enough gas in storage to cause stockpiles to reach above-normal levels by mid-December.