Natural Gas Prices in the United States are Likely to Cross USD 12 per MMBTU in the Up-Coming Months as Supply Fears Return

In the upcoming months due to the fear of supply and demand, the prices of Natural Gas are anticipated to cross over USD 12 per metric million British thermal unit (MMBTU). The exacerbated war held between Russia and Ukraine and post pandemic situations are the main reasons for spike of the price of natural gas.

In United States the natural gas prices have been surged and have hit 13-year higher due to the increasing demand of the alternate sources of energy. The demand of United States gas has been skyrocketed as the European countries have scrambled themselves to secure supplies and dissuade them off fossil fuels of Russia.

It is seen that recently that natural gas of United States is fallen below USD 8 per mmbtu. This is due to the output of domestic producers which causes the pressure by the record levels looking to benefit higher cost valuations.

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Nevertheless, on August 25, 2022, the natural gas futures in the United States dipped to about USD 9.4/mmbtu level following the Freeport LNG declared that this might delay the start over of its Quintana export business unit to November 2022, covering the earlier declarations that it would resume in October 2022.

In addition, due to the disruptions of the supply, the alternatives to the gas imports of Russia are searched by the European Union which hence resulted in the decline of the demand with the hype in prices. Because of the less profits and low investments in the downstream enterprises and weak power of purchasing which is leading to increase of price in the commodity.

When Poland, Netherlands, Denmark, Finland, and Bulgaria failed to comply with the demands of Russia which was that the buyers from foreign should pay for the gas in rubles, hence the country stopped the shipments. Nord Stream pipeline gas flows supported the prices, which further got down by 20 percent. Due to increasing need for the cooling amid hotter than average temperature in Europe and United States, the demand remained higher.

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In 2022, the prices of gas for Henry Hub on Fitch Ratings were USD 6.25 per 100 cubic feet (mcf) on June 14, 2022. It is expected that in the year 2023, the trade would be lower at around USD 4.0/mcf. The is approximated to decline by USD 3.25/mmbtu and USD 2.75/mmbtu in 2025 and beyond.

It reflects very tight supplies in the European markets because of its less exports from Gazprom as well as the inventories are low. Also, the European Union stated purpose of cutting out reliance from Russia.

As per Procurement Resource, In the upcoming months due to the fear of supply and demand, the prices of Natural Gas are anticipated to cross over USD 12 per mmbtu. The exacerbated war held between Russia and Ukraine and post pandemic situations are the main reasons for spike of the price of natural gas. In the United States the natural gas prices have been surged and have hit 13-year higher due to the increasing demand of the alternate sources of energy.

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When Poland, Netherlands, Denmark, Finland, and Bulgar failed to comply the demands of Russia which was that the buyers from foreign should pay for the gas in rubles, hence the country stopped the shipments. Due to increasing need for the cooling amid hotter than average temperature in Europe and United States, the demand remained higher.