Rising natural gas prices are increasing transport and production costs and are already beginning to worry the US industry, according to Reuters.
At present, American producers of liquefied natural gas are exporting much larger quantities to Europe after the sanctions imposed on Russia, and this also worsens the situation.
Since the beginning of the year, the price of natural gas in the United States has doubled – the pace is much faster than fuel prices, which angered American consumers. Many representatives of large companies are beginning to comment that the United States may need to limit exports to ensure prices in the country. Or at least until the US gas reserves are replenished.
However, the gas companies themselves offer another solution – more exploration and production permits and more export capacity. High commodity prices are encouraging the sector to expand, but most planned projects will not be operational until the end of the year, and for some, the horizon is even 2024.
Currently, there is not enough infrastructure to absorb the increase in yields. Bad weather at the beginning of the year also reduced yields and increased demand, added Reuters.
The United States fears rising gas prices, but they are far lower than in Europe or Asia. On Friday, US natural gas traded at just under $ 8 per million British thermal units (28.2 cubic meters) compared to $ 31 in Europe and $ 24 in Asia. At the beginning of 2022, however, the price in the United States was only $ 3.73 per million British thermal units.
A price of $ 20 per million British thermal units will cool the demand for natural gas from the United States, analysts added.
Experts expect that high gas demand in Europe is driving up global gas prices. This could lead to a slowdown in industry growth and a refusal for companies to create new jobs.
Concerning consumers, a serious increase in heating costs can be expected next winter.
Oil is falling for the first time in four sessions
The price of oil is falling for the first time in four trading sessions after the rapid spread of the coronavirus in China dealt a severe blow to the economy of the world’s largest importer of raw material, according to Bloomberg.
The global benchmark Brent fell 1.59%, or $ 1.77, to $ 109.78 a barrel.
The price of the American variety West Texas Intermediate (WTI) decreased by 1.26%, or 1.40 dollars, to 109.09 dollars per barrel.
China’s industrial production and consumer demand fell to their lowest levels in April since the pandemic began, while oil demand and refining also declined. Strict anti-epidemic measures have led to reduced fuel consumption.
“The data on China was unpleasant, which will drive the bears out in the open,” said Stephen Ines, managing partner at SPI Asset Management Pte. According to him, low liquidity contributes to market volatility.
The black gold market has been in turmoil since late February over Russia’s invasion of Ukraine and new coronavirus outbreaks in China. The war has led to higher food and fuel prices, and the retail price of gasoline and diesel in the United States has also accelerated the highest inflation in decades.
In addition, the global fuel market has tightened sharply as many buyers have begun to shy away from Russian oil.
Shanghai is one of the cities hardest hit by the virus in China, but there may be some relief on the horizon. The city reported a second day with no new cases of Covid-19 infection.
European Union (EU) foreign ministers will meet in Brussels on Monday to discuss the next package of sanctions against Russia, with the idea of postponing the idea of banning Russian oil imports being postponed due to objections from Hungary. Germany will stop importing Russian “black gold” by the end of the year, even if the EU fails to reach a consensus on the proposal, according to German government officials.
