HomeFinanceGlobal Supply Crunch of U.S. Natural Gas Leads to a Record High

Global Supply Crunch of U.S. Natural Gas Leads to a Record High

Driller’s ability pumps up more natural gas and expands supplies on robust demand was tested sharply when the natural gas price in the U.S. surged to an intraday level high which was the highest seen in 13 years. 

The record high price

Natural gas future went high up to $7.556 per million U.K. term units. The prices topped the January rally filed by a short squeeze and nearly double the price at the start of the year. 

There is already a fuel crunch globally, with suppliers unable to meet the surge in demand for consumption post-pandemic and further exacerbated by the Ukraine Russia war. The natural gas price in the U.S. has remained mainly below Asia and Europe rates for the whole of last year thanks to the massive presence of shale fields; this year, the price discounts have been shrinking. 

While the production is flat, the backup inventories held underground aquifers and caravans are below normal during this time of the year. In the meantime, the U.S. is exporting liquefied natural gas of its last molecule to Europe to help them to reduce its dependency on Russian energy supplies after the sanctions. 

According to the National Oceanic and Atmospheric Administration, there is a forecast that parts of the northern U.S. will have below-average temperatures from April 25 to May 1. This may lead to demand for power plant fuel and heating, leading to fuel getting diverted from here where in normal times would have gone into storage during this period. A shortage in the supply of coal in the U.S. has also helped the gas price rally, limiting the switching of fuels by power generators. 

Inventories increased by 15 billion cubic feet for the week ending April 8. According to Energy Information Administration, this was less than half of the last five years’ average gain. Stockpiles remained at 18% below the normal levels. 



Josie
Joyce Patra is a veteran writer with 21 years of experience. She comes with multiple degrees in literature, computer applications, multimedia design, and management. She delves into a plethora of niches and offers expert guidance on finances, stock market, budgeting, marketing strategies, and such other domains. Josie has also authored books on management, productivity, and digital marketing strategies.

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