Natural Gas Pricing High But Still Below Record Highs

Natural gas, the energy source of choice for most atmosphere furnaces in North America has been climbing dramatically over the past year for a number of reasons-reasons which are summed up in the article below from the Wall Street Journal. Pricing hurts and combined with the dramatic price rise in other commodities vital to heat treaters such as nickel this represent a full out assault on costs for everybody in the industry. However if it is any consolation pricing remains substantially below the all time high. That record was recorded in December of 2005 when Natural gas reached an all time high of $15.78 USD per million BTU which is roughly twice the current cost in the US. Small consolation indeed but it is something.

“Natural-gas prices extended their climb Thursday, bucking seasonal trends as demand from overseas continues to pressure inventories. U.S. natural-gas futures for May delivery rose 4.3% Thursday to $7.3000 per million British thermal units—a 96% rise in the year to date. While natural gas stockpiles rose modestly during the week ended April 8, they remain nearly 25% below last year’s levels and 18% below the five-year average for this time of year, according to data released Thursday by the U.S. Energy Information Administration. Demand for natural gas usually wanes in the spring as temperatures pick up, pushing prices lower before gas-powered cooling demand kicks in for the summer. But geopolitics and supply issues have driven a sharp rise in the commodity’s price in 2022. Energy prices have been higher across the board since the war in Ukraine and Western sanctions curtailed demand for Russia’s oil and natural gas exports. As Europe seeks alternatives, demand for U.S. natural gas has driven prices to the highest levels since 2008.

For comparison, prices were below $2 per million British thermal units before the pandemic. “Global natural gas markets are likely to be laser-focused on energy and national security interests due to the ongoing shift away from Russian energy imports in the West,” said Ryan Fitzmaurice, a senior commodity strategist at Rabobank. While analysts expect developments overseas to keep natural-gas prices higher this summer, the weather will come into play. Demand for the power-generation fuel tends to rise with extreme temperatures, which means hot weather could be bullish for the market. Analysts at energy advisory firm Ritterbusch & Associates said they expect the steep increase in natural-gas prices to continue. “We can envision further advance to about the $7.35 area when looking out across next week. Overall, this doesn’t feel like a market ready to establish an interim price top,” they wrote in a note to clients.”

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