The Slump in Energy Prices Cushions the Global Natural Gas Market
- 13-Oct-2022 7:40 PM
- Journalist: Shiba Teramoto
Rotterdam, Netherlands- The European Commission is driving to limit increasing energy prices, which has led to a reduction in Natural gas costs over the past few weeks due to easing storage capacity requirements, liquidity support, and a reduction in storage capacity needs.
The European Union bolstered its storage by importing more gas from the global market and restricting industrial use of Natural gas, which led to some companies shifting production overseas. European Natural gas costs declined amid growing reserves and imports of Liquefied Natural Gas (LNG), while significant petrochemical producers from the region keep on looking for ways of easing an unprecedented energy crisis. Natural gas storage in Europe is now about 90% full, which is higher than last year but still below compared to 2019-2020. The European Union is considering a temporary limit on Natural gas to ward off a potential recession. Europe has increased its Natural gas inventories by ramping up the LNG inflows since June 2022.
With the week ending on 7th October 2022, Natural gas futures at the Title Transfer Facility (TTF) in the Netherlands decreased by USD 2.45 to a weekly average of USD 51.00/MMBtu. While inflation festers in the United States and Europe, the threat of recession is growing. These developments have already reduced crude oil consumption and could further limit the demand for Natural gas in commercial and industrial applications. US Natural gas prices fell recently because of the Autumn season and strong production.
According to the ChemAnalyst, the price of Natural gas will ramp up in the upcoming weeks with strong futures, and winters that can be early or prolonged could send gas stocks sledding downward, pushing prices up. Also, the industrial demand for Natural gas can bolster the prices along with economic strength. European countries are trying to taper commercial gas demand to ensure ample supplies for residential heating this winter, but with insufficient gas availability, the prices can ramp up.