US natural gas prices are surging, with the benchmark futures contract rising to a 13-year high of $8.74 per million British thermal units. At a time when that fuel’s price tends to dip due to lack of demand in the spring. Simply put, it is hotter than normal in many parts of the United States. Power generators rely on gas to produce electricity, which is used by consumers and businesses to cool buildings.
Russia is the world’s biggest exporter of crude and fuel and is also the biggest exporter of natural gas.
Weather in Houston, the biggest city in Texas, is expected to reach 100 degrees Fahrenheit (37.8 Celsius) over the weekend. And about 15 degrees F higher than normal for this time of year. Cooling demand in Northern California spiked earlier this week as well, and people responded by turning on air conditioners. Spot prices – the cost to buy gas in specific locations, spiked in several spots which include the Henry Hub benchmark in Louisiana as well as in California, Pennsylvania, and Chicago.
ALL ENERGY MARKETS ARE RISING
The gas market is getting caught up in the frenzy that has hit the oil, fuel, and coal markets. As countries scramble to make sure they have enough reliable energy in the wake of Russia’s invasion of Ukraine. Russia is the world’s biggest exporter of crude and fuel and is also the biggest exporter of natural gas.
With fewer exports of Russian energy, countries in Europe and elsewhere are trying to secure supply. It is that factor that has boosted European benchmarks to several multiples of the US price. As gas futures at the Dutch Title Transfer Facility (TTF) were at $33 on Thursday. The United States has helped by diverting cargoes of liquefied natural gas (LNG) to Europe. Many expect LNG demand to continue to surge as European nations shun Russia in the years to come.
The United States has generally been isolated when it comes to the natural gas market. The nation produces roughly 97 billion cubic feet per day (bcfd) of natural gas. Which is enough for domestic consumption and export of about 12 bcfd by way of LNG tankers. However, export demand is rising, and even though the United States cannot add capacity at a moment’s notice. Expectations of a continued call on that demand are boosting the price of natural gas.