World natural gas prices increase rapidly, the US is still cavalier

The global energy crisis is sending natural gas prices in the UK, Europe and Asia soaring to record levels.

The United States is the world’s largest producer of natural gas. Photo: AFP

However, analysts say that the energy crisis is unlikely to spread to the US. Most parts of the world are waiting for this year’s winter weather. Meanwhile, the US is still “calm like a jar” because this country enters this winter with its position as the world’s largest natural gas producer and the level of inventories is not exhausted like in Europe today. .

Francisco Blanch, Head of Commodities Analysis and Investment Strategy at BofA Securities, a member of Bank of America, commented: “We’re in a different time right now. usually when all energy prices are going up”. However, “the US is ‘isolated’ from the current energy crisis trend compared to other parts of the world,” said Francisco Blanch.

That doesn’t mean US fuel prices stand still. The US natural gas futures contract on October 5 reached the highest level since December 2008. In the session of October 6, natural gas futures contract reached 6,466 USD per million British thermal units (MMBtu).

The price of natural gas for November delivery has since dropped, but it is still in the running for the seventh consecutive week. The natural gas contract recently traded around $5.63 per million British thermal units, more than double the level at the start of the year.

The price of natural gas in Europe has increased fivefold, while in the US and Asia the new increase is about 1.5 times, said analysts at Deutsche Bank. Particularly in Europe, the price of natural gas increased sharply, which can be converted to the price of oil trading around 200 USD/barrel.

The United States itself has its own energy problems. Last winter millions of customers in Texas were left in the dark for days as Texas suddenly became “North Pole” due to a snowstorm. However, the possibility of the US falling into an energy crisis like in Europe and Asia is unlikely.

Mr. Robert Thummel, managing director at energy investment consulting firm TortoiseEcofin, said that the US no longer has to rely on fuel supplies from the world and the real problem lies in Europe. This expert explained that the current shortage of fuel is not due to a lack of supply, but to a lack of infrastructure – especially infrastructure for liquefied natural gas.

According to the CEO of TortoiseEcofin, the price of natural gas this year is heavily dependent on the weather. A quiet winter this year, the price of gas may only increase slightly in the range of 3 – 4 USD per million British thermal units. If the winter temperature is warmer, the gas price will be in the range of 2.5 – 3 USD. Conversely, if the temperature plummets, the price of natural gas could very well skyrocket to double digits.

Although the US is in a better position than Europe going into this winter, the dramatic fluctuations in energy markets are having wide-ranging effects around the globe. This week, Credit Suisse raised its forecast for the fourth quarter of 2021 natural gas prices by more than 60%, from $3.50 to 5.75 per million British thermal units.

“The short-term build-up of winter gas stocks and growing global demand have pushed prices higher than we expected,” Credit Suisse said.

Similarly, in a report titled “Incredible gains, but limited declines,” long-established financial services firm JPMorgan also raised its 2022 average natural gas price forecast by 1.70 – $4.81 per million British thermal units. For this quarter, the average price of natural gas is estimated at around $5.50 per million British thermal units, bringing this year’s average price to $3.65.

“The impact of such price movements on inflation, growth, and balance of payments cannot be underestimated,” Deutsche Bank notes to its clients. “Those price fluctuations are a big deal,” warned Deutsche Bank.

Not only natural gas, coal and oil prices are also increasing sharply. First time Since November 2014, the price of WTI crude oil for delivery in the US on October 8 has reached 80 USD/barrel. Meanwhile, the price of Brent crude oil futures also rose to the highest level since 2018. Analysts said that the skyrocketing natural gas price has negatively impacted oil prices by using oil instead of natural gas. is, however, more economically beneficial.