U.S. natural gas futures appear to have risen more than 7 percent to $6.1 per million British thermal units. This is the highest price to be paid for US gas since October 28. It appears that the increase may be due to expectations of stronger demand and lower supply at the same time.
Updated U.S. pipeline gas flow data showed the biggest one-day drop in production since the weather collapse and severe cold weather in February.
U.S. gas rises more than 60 percent in three months
Foreign demand is expected to keep LNG exports from the United States at record levels. Indeed, European countries are considering tougher sanctions against Moscow and a shift away from Russian gas imports after reports of war crimes committed by Russian troops in Ukraine came to light. Britain has called on G7 and NATO countries to agree on a timetable for phasing out oil and gas imports from Russia.
Thus, the geo-arbitrage may continue in the gas market, where it is still far more profitable for Europe to buy gas from the U.S. than on its own continent, despite transportation costs. That is why, among other things, since the beginning of the month, i.e. within 6 days, the price of American gas seems to have increased by almost 10 percent, while since the beginning of the year the increase could reach over 60 percent.
Oil: stabilization at the level above USD 100
In comparison, the price of WTI crude oil may have risen by about 35 percent in the same time period, i.e. since the beginning of the year. Today, WTI crude oil futures have stabilized above $100 per barrel. Earlier, we had seen elevated volatility for several days. This may have been influenced by threats of additional sanctions against Russia offsetting fears of weaker demand following a rise in US oil inventories and the extension of the Shanghai lockdown.
U.S. crude inventories rose by 1.1 million barrels last week, contrary to market expectations of a 2.1 million barrel decline. Concerns about demand in China also emerged after authorities extended a lockdown in Shanghai on Tuesday, covering all 26 million residents of the Asian financial center.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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