The US benchmark natural gas price jumped above $ 6 per million British thermal units (MMBtu) on Wednesday, on the back of estimates that domestic production has dipped in recent days.
As of 8:20 am ET on Wednesday, the Henry Hub May futures contract was rallying 4.99% at $ 6,323 / MMBtu. All the contracts through February 2023 were trading above $ 6 / MMBtu, too.
Several factors played a role in the natural gas price rally, including estimates of a decline in US production, and record-high liquefied natural gas (LNG) exports as the United States looks to help European allies with non-Russian gas supply. Discussions in the European Union about potential sanctions or embargo on Russian energy exports such as coal or oil are also pushing gas prices globally higher. Expectations of a modest bump in US domestic demand for gas with spring storms coming later this week also supported the natural gas price rally.
“Dry gas production pushed notably higher over the past three weeks, but pipeline flow monitors are oscillating wildly in estimates for early April flows,” Eli Rubin, senior analyst at EBW Analytics Group, told Natural Gas Intelligence on Tuesday.
For the period April 5 through 11, US natural gas demand is expected to be moderate, according to NatGasWeather.com.
“A modest bump in national demand is expected Fri-Sun as a strong spring storm exits the Midwest and advances across the Mississippi Valley and East with heavy showers, severe thunderstorms, and slightly cool highs of 40s to 60s,” NatGasWeather.com says.
Natural gas prices in the US look well-supported due to lingering concerns about Europe’s gas supply and possible disruptions to said supply with Russia’s insistence that countries it considers “hostile” – including the United States, all EU member states, Switzerland, Canada, Norway , South Korea, Japan, and many others – start paying in rubles for natural gas.
By Tsvetana Paraskova for Oilprice.com
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