Natural gas prices are rising across Europe and Asia due to tighter supply of the commodity, lower production in Europe, and lower exports from Russia, the Financial Times reports, noting the supply crunch may intensify in the coming weeks.
In Europe, the report notes, prices for natural gas have hit 40 euros per mWh for the first time ever, with UK gas prices at the highest in 16 years. This is equal to approximately $14 per million British thermal units. In Asia, gas prices have hit $15 per mmBtu.
The price situation may worsen still, according to analysts.
“If anything it’s surprising there hasn’t been more concern,” Tom Marzec-Manser at ICIS told the FT. “In terms of additional supply there aren’t many options on the table globally. Russia is really the only discretionary source of supplies out there but we don’t know when additional deliveries might start. So traders around the world, from Japan to Brazil, are starting to watch European prices too.”
Demand for natural gas has been on a strong rebound globally. And the economic recovery has not been the only factor. In Brazil, for instance, LNG imports hit the highest ever because droughts have reduced the country’s hydropower capacity, according to the FT. in Europe, the long winter emptied gas storage facilities, and they have yet to be replenished. In Asia, the strong economic recovery has coupled with a seasonal peak in demand during the summer to push prices higher still.
For some, this has been good news: U.S. exports of liquefied natural gas reached a record high during the first half of the year, at an average of 9.6 billion cu ft daily. Asia remained the top destination for U.S. LNG exports from January through May in 2021, accounting for 46 percent, the EIA has estimated. Asia was followed by Europe with a 37-percent share of American LNG exports.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More