Price of natural gas in US surges to 13-year high due to Ukraine conflict

The price of natural gas in the United States has increased to its highest intraday level in more than 13 years, as robust demand puts drillers' ability to expand supplies to the test. 

Futures rose as high as $7.558 per million British thermal units, topping January's short squeeze-fueled rally and roughly double levels from the start of the year.

A global fuel shortage is rippling across markets as suppliers struggle to meet a post-pandemic surge in demand, further exacerbated by the war in Ukraine. While US natural gas rates have remained well below rates in Europe and Asia for the last year, that discount has been shrinking thanks to a bounty of shale fields. 

Backup inventories in underground caverns and aquifers are below average for this time of the year, and production is holding flat. Meanwhile, the United States is exporting every molecule of liquefied natural gas it can to aid Europe in reducing its reliance on Russian energy supplies.

According to the National Oceanic and Atmospheric Administration, temperatures in the northern United States will be below normal from April 25 to May 1. This could increase demand for heating and power-plant fuel, diverting supply that would otherwise go to storage at this time of year. A lack of coal in the United States has also fueled the gas rally, limiting power generators' ability to switch fuels.

The Energy Information Administration reported last week that inventories increased by 15 billion cubic feet in the week ending April 8, less than half the average gain for the period over the previous five years. Stockpiles are still nearly 18 per cent lower than usual.

Also Read: India-US 2+2 meeting: Indo-Pacific, QUAD, Russia-Ukraine conflict, more discussed

Also Read: Moscow confirms elimination of fuel storage facilities in 4 Ukrainian cities

Also Read: India ‘strongly against’ conflict in Ukraine, if chosen side, it is side of peace: Jaishankar in Lok Sabha