The price of U.S. natural gas has reached a 13-year high, briefly rising above $8 U.S. for the
first time since 2008, as global demand exceeds drillers’ ability to expand supplies.
Natural gas futures in New York are now the most overbought they’ve been in nearly four years.
Futures rose 7.1% to close at $7.82 U.S. per million British thermal units on the New York
Mercantile Exchange yesterday (April 18).
The last time prices were this high was August 2008, when hurricanes damaged offshore gas
platforms in the Gulf of Mexico and summer weather stoked demand for power to run air
conditioners.
This year’s gas rally has been driven by a global fuel crunch that’s rippling across markets as
suppliers struggle to meet a post-pandemic surge in consumption, further exacerbated by
Russia’s war in Ukraine.
While U.S. gas prices have remained below rates seen in Europe and Asia due to a bounty of
shale fields, that discount has been shrinking in recent months.
Backup inventories held in underground caverns and aquifers are below normal for this time of
year and the U.S. is exporting liquefied natural gas to help Europe reduce its reliance on
Russian energy supplies.
At the same time, production remains below pre-pandemic levels despite government forecasts
calling for record production from the Permian basin in Texas this spring.
Mild weather could bring prices back down to the $3 U.S. to $4 U.S. range, say analysts. But for
now, stockpiles remain almost 18% lower than usual while below normal temperatures are
expected across parts of the northern U.S. from April 25 to May 1.
Colder temperatures could increase demand for heating and power-plant fuel, diverting supply
that normally goes to storage during this time of year.