U.S. natural gas futures soared to a seven-year high amid escalating concerns about tight supplies heading into the winter-heating season.
Gas prices are soaring across the northern hemisphere as anxiety mounts about the prospects of a supply crunch in coming weeks when cold weather begins to descend and homeowners switch on furnaces. A confluence of production and processing disruptions are running headlong into robust demand for the fuel in some of the world’s biggest economies.
The rally in North America and Europe is heightening inflation concerns and worries about ripple effects that could roil gas-intensive industries from fertilizers to steel and food producers. Gas for October delivery settled up 7.6 per cent at US$4.914/mmBtu in New York on Wednesday, a level not seen since unprecedented cold gripped the U.S. and Canada during the Polar Vortex of early 2014.
U.S. futures have advanced 94 per cent this year, on track for the best annual performance since 2000.
“We’re probably going to go into this coming winter, just the way things were already setting up, with the lowest level of gas in storage since 2014,” said John Kilduff, founding partner of Again Capital LLC.
In the U.S. sector of the Gulf of Mexico, about 78 per cent of gas production remains offline more than a week after offshore crews fled to safety ahead of Hurricane Ida’s arrival.
Meanwhile, European energy executives are warning of a difficult winter as already-tight supplies are stretched by post-pandemic economic reopenings.
© 2021 Bloomberg L.P.