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Experts warn that Europe’s record low natural gas supply could allow other parts of the world to pay higher heating costs to maintain the warmth of this winter. ..
Natural gas prices rose more than 35% last month amid a decline in supply and a surge in demand as the global pandemic reopened. It is especially cold in the Northern Hemisphere.
Some experts now point to Europe, where supply is 16% below the five-year average. This is the lowest ever at this time of the year.
John Kirduff, Again Capital Partner, Told CNBC When it comes to Europe, “people are starting to cast the word’crisis’.”
“Europe is right behind the eight-ball in the winter season. We will focus on this product, which has been overlooked for the past few years,” Kilduff added.
If the shortage in Europe becomes more serious and prices can double, things could get worse for the United States as well.
“In the cold winter, gas isn’t just tight. IHS Markit Vice Chairman Daniel Yergin said: In that case, prices could rise sharply.” Is it a physical shortage? , Will be reflected in the price. “
Meanwhile, Goldman Sachs product analyst Samantha Dart paid attention last week If the coming winter is colder than usual, the price of natural gas can exceed $ 10 / MMBtu.
“A slight low temperature deviation from the average may be resolved by a gas-to-coal alternative to appalachian coal in the gas price range of $ 5-6.50 / MMBtu, but close to the complete standard deviation from the average. Things can cause price spikes. Gas above $ 10 / MMBtu destroys demand, “Dart said.
According to some strategists, the outlook may not look so bleak if autumn and early winter are mild, more gas is stored and prices can fall.
“We are more at risk to price spikes, rather than ever-increasing sustainable prices,” RBC product strategist Christopher Rooney told CNBC.
But Europe is not alone in the fight against declining natural gas supplies. According to the Energy Information Agency, gas levels in US storage are 7.4% below the five-year average and 16.8% below last year’s levels during this period.
In addition, US industry is suffering from declining production due to hurricane Aida, which reaches 90% of natural gas production, but more than 75% of the Gulf of Mexico’s natural gas remains closed. Analysis of September 13 by S & P Global Platts..
The growing international demand for liquefied natural gas (LNG) exports to the United States has also spurred higher prices for natural gas used in the processing of heating, power generation, chemicals, fertilizers, paper and glass. merchandise.
The situation in Europe caught the attention of US senior energy adviser Amos Hochstein, who warned that “life is at stake” in Europe this winter amid threats of supply shortages and supply cuts.
“In a really cold winter by January and February, we can run out of supplies, and that’s what I’m concerned about,” Hochstein said. I told reporters on FridayRussia pointed out that “the supply to the market is insufficient compared to the conventional supply,” which also contributed to the rise in prices.
“It’s not just a geopolitical game. People’s lives are at stake,” he added.
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