US natural gas up 4% as Ukraine war causes global energy prices to soar

NEW YORK: U.S. natural gas futures rose about 4% to close to a four-week excessive on Wednesday, gaining some uncommon help from surging global oil and gas values as the Russia-Ukraine battle stokes energy provide considerations.

Since the beginning of the yr, the U.S. gas market has principally shrugged off what was taking place in Europe, focusing extra on home climate and provide and demand.

In truth, U.S. values have moved in the other way of European values over the previous couple of months, following European futures solely about 40% of the time because the begin of 2022. During the fourth quarter of 2021, U.S. futures adopted European values about two-thirds of the time.

But it is onerous to ignore the 50% enhance in gas futures on the Title Transfer Facility (TTF) within the Netherlands earlier on Wednesday – the European benchmark is up greater than 100% since Russia invaded Ukraine on Feb. 24 – particularly since these increased abroad values will hold demand for U.S. liquefied natural gas (LNG) exports sturdy for months to come. [NG/EU]

No matter how excessive global gas values rise, nonetheless, the United States, the world’s largest gas producer, was already producing LNG close to full capability and can not make way more of the super-cooled gasoline.

So, the United States labored with different nations, earlier than the Russian invasion, to be sure that gas provides, principally from LNG, would hold flowing to Europe. Russia, the world’s second largest gas producer, normally supplies round 30% to 40% of Europe’s gas, which totaled about 16.3 billion cubic toes per day (bcfd) in 2021. Read full story

Front-month gas futures rose 18.9 cents, or 4.1%, to settle at $4.762 per million British thermal models (mmBtu), their highest shut since Feb. 3.

U.S. oil values , in the meantime, jumped as a lot as 9% on Wednesday to their highest intraday commerce since 2011 on considerations over provide disruptions from Russia, which can also be one of many world’s prime oil producers. [O/R]

Data supplier Refinitiv mentioned common gas output within the U.S. Lower 48 states was on observe to rise to 93.2 bcfd in March from 92.5 bcfd in February as extra oil and gas wells return to service after freezing earlier within the yr. That compares with a month-to-month file of 96.2 bcfd in December. Read full story

With hotter climate coming, Refinitiv projected common U.S. gas demand, together with exports, would drop from 122.2 bcfd this week to 108.1 bcfd subsequent week.

The quantity of gas flowing to U.S. LNG export vegetation slid from a file 12.44 bcfd in January to 12.43 bcfd in February and 11.73 bcfd thus far in March.

Traders mentioned demand for U.S. LNG would stay at or close to file ranges so lengthy as global gas values hold buying and selling nicely above U.S. futures as utilities around the globe scramble for cargoes to meet surging demand in Asia and replenish low inventories in Europe, particularly with the menace that Russia might minimize gas provides to Europe.

Gas futures traded round $54 per mmBtu in Europe and $32 in Asia , in contrast with round $5 within the United States. But irrespective of how excessive global values rise, the United States solely has the capability to flip about 12.5 bcfd of gas into LNG.

Global markets could have to wait till later this yr when extra of the 18 liquefaction trains beneath development at Venture Global LNG’s Calcasieu Pass export plant in Louisiana begin producing LNG. The first tanker carrying LNG from Calcasieu left early on Tuesday.- Reuters