US Natural Gas Prices Hit Highest Since 2008 Financial Crisis... "Surge in Demand from Europe"

Europe's 6th Major Sanctions on Russia vs. Russia's Retaliatory Sanctions Impact
Chilly US Spring Weather Also a Factor... "Gas Inventory Decline"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] U.S. natural gas prices have reached their highest level in 14 years since the 2008 global financial crisis. This surge is attributed to expectations that European demand for U.S. liquefied natural gas (LNG) will sharply increase following Russia’s announcement of retaliatory sanctions against unfriendly countries ahead of the European Union’s (EU) announcement of its 6th round of sanctions against Russia. The U.S. is the third largest natural gas supplier to South Korea, following Qatar and Australia.

According to CNBC on the 3rd (local time), the Henry Hub natural gas futures price, a key indicator of U.S. gas prices, soared to $8.16 per MMbtu (million British thermal units), up more than 9% intraday compared to the previous close, marking the highest level since September 2008.

Gas prices began to rise on the day following the EU’s announcement plan for the 6th round of sanctions, including an oil embargo on Russian crude. Earlier, Josep Borrell, the EU High Representative for Foreign Affairs and Security Policy, stated on his Twitter, "We are preparing a 6th sanctions package aimed at excluding more Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), including those involved in disinformation on the list, and targeting an oil import ban."

Russia retaliated by announcing counter-sanctions. According to TASS news agency, on the same day, Russian President Vladimir Putin signed a presidential decree banning all exchanges, including trade and financial transactions, with unfriendly countries, their companies, and international organizations subject to sanctions.

The Russian government plans to announce a detailed list of sanctioned targets within the next 10 days. Previously, on March 7, Russia designated 48 countries as unfriendly, including South Korea, the U.S., the U.K., Australia, Japan, and 27 EU member states.

As the direct confrontation over energy embargoes between Europe and Russia continues, contracts for U.S.-produced LNG are rapidly increasing. According to Bloomberg News, more than 10 new LNG drilling projects in the U.S. have resumed since the Ukraine crisis, with over 30% of them already securing long-term contracts. Bloomberg also reported that competition among European and Asian countries to secure U.S. LNG contracts is intensifying.

Increased spring gas demand within the U.S. compared to previous years is also cited as a factor. According to The Wall Street Journal (WSJ), U.S. gas inventories are about 17% lower than usual. This is attributed to colder-than-expected spring weather due to abnormal temperatures, which significantly increased gas demand. Considering summer cooling power demand and winter heating demand, WSJ forecasts significant price fluctuations, potentially surpassing the $10 range in the near future.

This content was produced with the assistance of AI translation services.