The coronavirus pandemic and the Russia-Ukraine crisis have accelerated inflation globally. People worldwide had to cut down on their daily resources in order to keep up with the rising prices of commodities. It’s no news that the prices of oil and natural gas are surging ever since Russia invaded Ukraine. There is no control over the stock market or even the commodity market worldwide.
Natural gas prices in the United States soared to their highest level in more than 14 years on Monday, owing to a worldwide energy shortage caused by Russia’s war in Ukraine and projections for colder spring temperatures.
Natural Gas futures rose 10% to $8.05 per million British thermal units, the highest level marked since September 2008 inflation period. The increase builds on previous success, with natural gas having posted five consecutive weeks of gains. Prices eventually fell slightly, with the contract closing the day at $7.82, up 7.12%.
“The impact of the conflict between Ukraine and Russia is likely to be long-lasting for North American natural gas markets,” said David Givens, Argus Media’s head of natural gas and power services for North America. According to EBW Analytics, the U.S. market has gone into “overdrive” due to a “bullish weather change.”
“LNG exports have taken on more significance with geopolitics and demand from both power generation/ industrial usage are strong. The US role as an exporter continues to increase,” said RBC. The firm also mentioned, “There is a fundamentally constructive backdrop driven by record LNG outflows, strong Mexico exports, and producer discipline,” the firm added.
According to Campbell Faulkner, Senior Vice President and Chief Data Analyst of OTC Global Holdings, “Amid the jump in prices producers have kept output under control, and inventory in storage is now 17% below the five-year average”. He also mentioned ″The US is starting to potentially look like Europe this time last year crushing the near-term seasonality and switching the curve to a constant demand scenario”. Campbell also added “Additional pressure on natural gas is also coming from the battle between Asia and Europe for spare LNG cargoes which will inevitably be diverted away from the US west coast and New England coming into next winter,”
Even still, not everyone believes the surge will last. Citi increased its 2022 Henry Hub price prediction by 40 cents to $4.60 per million British thermal units, a considerable discount from where the contract now trades. “A combination of variables might increase demand while slowing output growth,” the firm started, “but the market may be overestimating their effects because prices have risen.”
In trading, Monday, shares of natural gas producers EQT Corp., Range Resources, and Coterra Energy all set 52-week highs. Range and Coterra both increased by more than 4%, while EQT increased by about 7%.
Apart from Natural Gas, the price of corn hits a 9 year high as the prices of all commodities are growing swiftly. Wholesale Price Inflation (WPI) Inflation hits a 4 month high of 14.55% in March as Crude spikes up!
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