U.S. natural gas closes lower after European gas skyrockets

posteriori/E+ via Getty Images

U.S. natural gas prices (NG1:COM) settled -3.6% at $4.833/MMBtu, reversing sharp overnight gains and pulling back from Friday's $5.016 closing price that was the highest in more than a month, as uncertainty over Russia's war with Ukraine gave way to forecasts for warmer weather in the U.S.

European energy prices had skyrocketed earlier, as futures for natural gas on the Dutch TTF reached as high as $115/MMBtu before pulling back to ~$93.

ETFs: UNG, UGAZF, DGAZ, BOIL, FCG, KOLD, UNL

Natural gas-focused stocks ended mostly higher in Monday's trading: TELL +8.5%, CTRA +3.4%, AR +3.2%, SWN +2.9%, CHK +1%, RRC +0.9%, EQT +0.6%, LNG -0.4%.

U.S. natural gas prices had started to rally late last week due to rising worries about gas supply shortages in Europe, but the local weather is still a major factor in U.S. markets, and the latest 10-day window showed moderating weather patterns, including above normal temperatures in parts of the Mid-Atlantic and East Coast.

Regardless of any need for more natural gas abroad, "we have limited capacity to export LNG. Once those existing facilities are running full-out to load cargoes, that's it," University of Tulsa's Tom Seng says, even as U.S. liquefied natural gas expansion projects are a top priority as the need becomes more evident.

Cheniere Energy said it has sold out through the 2040s of the planned production from the newest trains at its Sabine Pass and Corpus Christi projects.

Comments

[koolsool]

The Biden administration is holding up the 6 permits to built more LNG export terminals. Elections have consequences.

[DeeDad]

@koolsool for you have a link for that info? I’ve been trying to find one.

[Douglas Payne]

@koolsool And Rigged Elections, even more-so~!

[Weather Man]

At current energy prices in the EU, many industries simply shut down. They are staring into the abyss.

[Niko Theodoridis]

@Weather Man
This is insanity.
People cannot afford shit anymore and now we get refugees on top.

These politicians lost their minds. The next 10 years will be rude for Europe and riots will be very likely.

[sparkl]

@Niko Theodoridis
>> This is insanity. People cannot afford shit anymore and now we get refugees on top...

You haven't seen nothing yet..

"US Navy destroyers USS Donald Cook and USS Forrest Sherman, with guided missiles, have entered the Baltic Sea, according to Russian Defense Ministry's National Defense Control Center (NDCC). "

www.youtube.com/...

[terziev]

@Niko Theodoridis , no chance for riots. There weren't any Covid riots. If you could accept Covid lockdowns and compulsory "vaccination", you could swallow everything. Don't worry. Nobody will go to bed hungry. Russophobia is produced in such quantities, enough to feed the whole EU.

[LK106218]

The pricing of NG and crude oil should promote drilling rig activity. Based on the data, rig activity has been increasing over the past 2 years and prior to the affects from the Russian invasion of Ukraine. Drilling activity bottomed out in 2020 at around 250 in the US. The spike in the past 2 weeks may accelerate drilling activity, unless the E&P companies see recent events as transitory.

Others in the industry may have more information but my research among internet sources indicates that there is about 4 months between the start of drilling to delivery of fuel. There is also a normal decline in well production that must be replaced by new wells. I have not seen an assessment of what rate of drilling is required to maintain current production.

The 250 active drilling rigs in Trump's last year was probably insufficient to maintain US production levels and that is apparent in the roughly 400K barrel per day decline in US production from that time. The increase in drilling activity should turn that trend of a decline in US production. But any reaction to sanctions on Russia will take time whether that would be domestic or foreign.

The US has difficult options to backfill Russian production but those options are more for the benefit of allies than the US itself. We all pay the price of crude price increases. But the US generally meets its own consumption from reliable sources. Crude oil is shuffled around to meet refinery requirements. Imagine the revenue increase for a company like COP that has focused on lowering production cost. Their margins must be nearing record levels.

See the following for rig activity >

www.tcicapital.com/...

[The February 25th Baker Hughes rig count report shows 650 active drilling rigs in the US. One month ago, the total active rig count was 604, and one year ago it was 402 rigs.

The oil rig count is currently 522 rigs, compared to 491 one month ago, and 215 last February. The gas rig count is 127, compared to 113 one month ago and 91 one year ago.]

[JeffSizemore]

@LK106218 in other words joe Biden is allowing co2 to go into the atmosphere and causing an acceleration of global warming

[jakeelwood5]

@JeffSizemore There is almost no evidence carbon dioxide causes global warming to any great extent.

[LaOrtega]

https://bit.ly/3CmVuDq
https://bit.ly/3Kp5krk

iopscience.iop.org/...

From wikipedia:

The actors behind climate change denial form a well-funded and relatively coordinated coalition of fossil fuel companies, industry groups, conservative think tanks, and contrarian scientists. Like the tobacco industry, the main strategy of these groups has been to manufacture doubt about scientific data and results.

So if you think you know better than 99% of the world's scientists by all means.

For what it's worth, I do think we still need to invest in fossil fuel production and consumption for the next 25-50 years. But pretending that climate change isn't happening is not really helpful. Debating its impact and the how to best time the change to alternative energy sources is a better use of our time.

[Active_Trader]

Natural gas imho is a very highly speculative, unregulated, meaningless benchmarks, manipulated trade. Happy gambling. Common sense need not apply. Ridiculous that the price of USA natgas trends natgas in EU at times as USA exports jack.

[Sighcopath]

So in Europe for their inflation numbers; does Europe not count the cost of fuel like they do in the USA for the CPI? If they don't then there is little if any, or even no inflation happening in Europe -- so move along nothing to see here!

[SomeGuy14]

Yet TTE goes down

[Bronco Fan]

$110/mcf...good grief. A new Marcellus well that comes on at 20 MMcf/day would be $2.2 million in revenue...in one day! Of course they don't have much for shale plays in Europe

[bondsmoker]

@Bronco Fan

Can you imagine heating bills in Europe right now?

Could easily run $3,000/month, just to heat a modest home.

[TheOracle12]

@bondsmoker putin has them by the balls

[terziev]

@bondsmoker most govs here in Eurostan has frozen our bills. However, most of the businesses aren't as lucky - factories are closing down en masse. The price of the electricity is beyond imagination.