to the rescue here, because there's just not enough infrastructure on either side - on the U.S. He noted that the shortage stems not from a lack of supply, but rather from a lack of infrastructure - specifically for liquified natural gas. " hasn't had to rely on the rest of the world to provide its supply, and that's really what Europe's problem has been," said Robert Thummel, managing director at TortoiseEcofin. has its own power problems, as demonstrated in Texas last winter when millions of customers were left in the dark for multiple days, the same price jump and energy crunch playing out in Europe and Asia is unlikely to happen. The Oxford Institute for Energy Studies summarized this confluence of factors, noting it creates "this perfect storm." In some cases, cargoes are bypassing Europe for Asia, where they can get better prices. Asian demand is jumping as countries including China look to shift away from dependence on coal. The country has limited supplies to Europe this year in what some have called a politically motivated move, although this week President Vladimir Putin said Russia could boost output in an effort to alleviate the strain in Europe.Įurope is not the only place in need of supplies. Carbon offsets are pricey and the continent has moved away from coal-fired plants, meaning everyone was suddenly competing for natural gas.Įurope's gas production has declined over the last two decades, and the continent now depends on imports from Russia. On top of that, slow wind speeds and dry conditions weighed on renewables' energy output. At the same time, producers, who suffered through 2020's unprecedented downturn, have been slow to hike output.Ī colder and longer-than-expected 2020 winter meant that European inventory levels were below average heading into the fall. ![]() Several factors are fueling the price surge in natural gas and commodities such as oil and coal more generally.ĭemand is rebounding as economies get back to business and consumers return to pre-pandemic activities. "The importance of these moves on inflation, growth and external accounts are not to be underestimated," the firm wrote in a note to clients. In Europe, the price spike in natural gas is equivalent to if oil were trading around $200 per barrel. and Asia prices are about 1.5 times higher. Analysts at Deutsche Bank noted that in Europe prices are up fivefold, while in the U.S. The contract currently trades around $5.63 per MMBtu, which is more than double where prices were at the beginning of the year.īut the moves abroad are far more extreme. Natural gas for November delivery has since eased from that level, but it's still on track for the seventh straight week of gains. On Wednesday, the contract traded as high as $6.466 per million British thermal units (MMBtu). ![]() Natural gas futures settled at their highest level since December 2008 on Tuesday. is much more insulated from this global energy trend than the rest of the world," he added. "We're at a unique point in time now where just all energy prices are going up," Francisco Blanch, head of global commodities, equity derivatives and cross-asset quantitative investment strategies at Bank of America Merrill Lynch, said last week on CNBC's "The Exchange." "The U.S. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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