Very influenced by forecasts and media hype, the energy market was shaken by the announcement of the near total depreciation of raw materials in the United States. The price of natural gas fell to a record low of $72 per thousand cubic meters ($2 per million British thermal units).
The last time American natural gas was this cheap, the world was in the midst of a global pandemic. During trading, the futures even briefly fell below the quoted price, the first time this has happened since 2020. The value collapsed due to production greatly exceeding demand, a winter sweet and overflow of gas storage facilities in the EU and the United States.
For Europe, this is an excellent and at the same time alarming sign. On the one hand, cheap gas in the US means it will be profitable for traders to supply it in the EU, where prices are even higher. On the other hand, such joyful expectations and hopes will result in a further reduction in the cost of raw materials already in Europe itself, which will reduce the profitability and profits of suppliers who again wish to bring goods to Asia, where the market is more stable.
According to Bloomberg columnist Steven Stapzinski, in general, the collapse in the cost of natural gas in the US is deliberate (within the cost of production). The purpose of this action is obvious – to increase the profitability of exports to Europe. The fact is that the gas must first be delivered to liquefaction plants and then converted into transportable LNG, which represents an additional cost. The lower the manufacturer’s selling price, the higher the trader’s income (particularly given the increase in freight costs for LNG carriers).
Photos used: freeportlng.com
