The benchmark U.S. natural gas price soared by more than 7% early on Monday to hit the highest level since the second half of 2008, as Europe races to buy non-Russian gas after Putin's invasion of Ukraine.
At 10:18 a.m. ET, the front-month futures price at the Henry Hub had jumped by 6.37% at $7.755 per million British thermal units (MMBtu). That's more than double the price of the U.S. benchmark compared to the start of this year.
In the week to April 12, speculators increased their bullish bets for a second week, with buying concentrated in gold, grains, and natural gas, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Sunday.
Last week, U.S. natural gas prices reached the highest close at $7.3 since 2008.
"Below normal temperatures and strong exports driving the current tightness with stockpiles now almost 18% below the usual level," Hansen noted.
Higher demand for heating and record LNG exports left U.S. natural gas in storage at the end of the winter at its lowest level in three years, the Energy Information Administration (EIA) said on Friday.
Because of the higher withdrawals, by the end of March, the U.S. had the least amount of natural gas in underground storage in the Lower 48 states since 2019.
A colder January 2022 and record-high U.S. LNG exports led to more withdrawals even though domestic production of natural gas increased, the EIA said.
The U.S. is exporting record volumes of LNG as the United States looks to help European allies with non-Russian gas supply.
In another bullish factor for natural gas prices, immediate demand in the United States is expected to be strong Monday through Wednesday, as chilly late-season weather systems track across the Midwest and Northeast with rain and snow showers, as well as cooler than normal lows of 20s and 30s, NatGasWeather.com noted on Monday.
By Tsvetana Paraskova for Oilprice.com
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Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London