The price of natural gas in the US jumped to the highest level in more than 13 years on Monday as Russia's war on Ukraine causes a global energy crunch and as forecasts called for cooler spring temperatures.
The highest price since October 2008 was $7.80 per million British thermal units. Natural gas came off five straight positive weeks.
With the market ill-equipped to handle any further bullish shocks, notable continued gains for natural gas are likely this summer. The US market has been sent into drive by abullish weather shift.
The price of natural gas in the U.S. is up 102% for the year, which is adding to inflationary concerns. The move is less extreme than in Europe, where natural gas futures have risen to record levels as the bloc scrambles to move away from dependence on Russian energy.
Henry Hub prices are rising because the U.S. is sending record amounts of liquified natural gas to Europe.
With geopolitics and demand from both power generation and industrial usage are strong,LNG exports have taken on more significance. The US role as an exporter continues to increase.
Producers have kept output under control, and inventory in storage is below the 5-year average, as a result of the jump in prices.
There is a fundamentally constructive backdrop driven by record LNG outflows, strong Mexico exports, and producer discipline, according to the firm.
Some people don't believe that the rally is here to stay. The Henry Hub price target was raised by 40 cents to $4.60 per million British thermal units, which is below where the contract currently trades.
A combination of factors could raise demand and slow production growth, but the market might be over-estimating their impacts as prices have surged, the firm said.
Early Monday, shares of natural gas producers were up more than 4%. Range Resources traded higher.
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