U.S. natural gas futures (NATGAS) have surged 16.6 percent this week, reaching their highest level in 13 years. Since the beginning of the year, the U.S. gas price appears to be up 96 percent.
The key factor in the demand for LNG from the US seems to be the situation in Europe, namely the war unleashed by Russia and the sanctions imposed on the aggressor.
In Europe, gas costs $28 per million British thermal units (mmBtu). In the US, prices have reached $7,300, the highest since October 2008, but that's still $21 less than in Europe.
Even including transportation costs, gas from the U.S. may be cheaper for Europeans than its European counterpart. Therefore, talks are underway about further deliveries of the raw material from America to the Old Continent, so that European Union countries could break their dependence on gas from Russia, which is the second largest gas producer in the world after the USA. In 2021 it supplied about 30-40 percent of gas to Europe.
Recent price increases in the U.S. may also have been influenced by smaller-than-usual inventories in storage, a recent decline in production, and climate factors. Canada's Alberta province has experienced a massive cold snap, increasing demand for gas.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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