U.S. natural gas prices rise to record levels amid COVID-19 woes
U.S. Natural gas has been set as the most expensive energy commodity for the first time in more than a decade as the COVID-19 pandemic continues to disrupt demand in other regions.
U.S. Gas futures gained up to 10% to $1.815 per million BTU in April. The surge comes as investors expect the record plunge in oil prices to drive U.S. companies to halt drilling operations in which gas is extracted as a byproduct.
Oil prices in Europe and Asia fell to new lows due to oversupply and dwindling consumption caused by the pandemic. Asia’s benchmark LNG price fell to $1.94 per million BTU on Thursday, according to S&P Global Platts. Meanwhile, gas futures in the United Kingdom closed at $1.71.
U.S. gas became the cheapest since the shale revolution, which turned the country into the world’s largest producer. This resulted in major export terminals being built and financed by customers attracted to the low-costing contracts.
Currently, U.S. gas exporters are being met with challenges to increase purchases from Europe and Asia due to the record surge in gas prices. An LNG shipment in Asia was sold in the high-$1 per million BTU range, marking it as the cheapest spot cargo transaction ever recorded in the region.
Almost 12 U.S. fuel shipments for June delivery were cancelled and many speculate that an additional 20 shipments could be canceled within the month.