US Natural Gas Prices Hit 14-Year Record High, EU Prices Surge on Planned Pipeline Closure

US Natural Gas Prices Hit 14-Year Record High, EU Prices Surge on Planned Pipeline Closure
The Industrial Park of Hoechst in Frankfurt, Germany, on June 23, 2022. Germany is in the process of activating an emergency plan for natural gas supplies to ward off a crisis this coming winter. Europe’s energy shortages are a direct consequence of the incremental acceptance of a green ideological agenda since the 1960s. (AP Photo/Michael Probst)
Katabella Roberts

U.S. natural gas prices climbed to a new 14-year high on Monday amid fears regarding shortages in Europe prompted by Russia's plans to shut down the vital Nord Stream 1 gas pipeline at the end of the month.

Russian state gas giant Gazprom last week announced that the pipeline, which links western Russia and Germany, would be shut down for three days of "routine maintenance" from Aug. 31 to Sept. 2.
On Monday, U.S. natural gas futures topped $10 per million British thermal units, the highest since July 2008, driven by strong domestic and international demand.
Prices had previously plunged in June after a fire broke out at the Freeport LNG natural gas liquefaction plant in Texas, shutting the plant down and cutting LNG export capacity by 20 percent. The plant is expected to partially resume exports in October, meaning exports are set to rise.
Early on Tuesday, gas for September delivery also surpassed $10. That's an increase of 20 percent this month and double the price of a year ago, according to The Wall Street Journal. 

A combination of soaring energy prices in Europe, an ongoing summer heatwave, and hurricane season, which threatens production in the Gulf of Mexico, could drive prices up further, according to experts.

"Virtually all of our fundamental and technical indicators continue to flash green lights toward higher price levels," trading firm Ritterbusch & Associates told clients on Monday, The Wall Street Journal reports. The firm predicted prices could climb as high as $11.90 in the near future.

Record Highs in Europe

Elsewhere, European natural gas prices also finished at a record high on Monday, reflecting levels that were last seen in the immediate aftermath of Russia's invasion of Ukraine.
The Dutch TTF hub, a European benchmark for natural gas trading, climbed 19 percent, to reach €291.50 ($291.78) per megawatt hour.

Prices remain close to that level as of Tuesday. Overall, natural gas prices in Europe are almost 10 times where they stood this time last year.

On Monday, Robert Habeck, Germany's federal minister for economic affairs, warned that Russia could further reduce supplies to the country, telling public broadcaster ZDF: "We have a very critical winter right in front of us" and that the country "must expect Putin to further reduce gas."

Gas prices have surged across the globe amid an intense energy squeeze prompted by Russia reducing or cutting off natural gas flows to a dozen European Union countries.

That has prompted countries to secure cargoes of liquefied natural gas ahead of winter. However, U.S. inventories are well below normal after some of the hottest weather on record saw an increase in demand, although milder temperatures are now expected.

The latest data from the Energy Information Administration showed a smaller-than-expected 18 billion cubic feet (Bcf) injection into natural gas storage inventories for the week ended Aug. 12.
"This [$10] has been a long-awaited number," Robert DiDona, of Energy Ventures Analysis, told Reuters. "We've had strong LNG demand, and we've had a much warmer than normal summer, which has put continued pressure on our storage estimates, which we expect to finish below the five-year average, so that has subsequently been resulting in a higher forward curve."
Elsewhere on Monday, U.S. Energy Secretary Jennifer Granholm also warned that gas prices could surge across the country if China opens up significantly after implementing strict COVID-19 lockdowns.
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