Commodities Corner: Why natural-gas prices are holding near 14-year highs

by | Aug 18, 2022 | Stock Market

Natural-gas futures recently climbed to their highest level in 14 years, with tight supplies in the U.S. and Russia’s move to reduce the flow of the fuel to Europe setting prices up for a second straight weekly climb. September natural gas settled at $9.329 per million British thermal units on Tuesday, the highest front-month contract finish on the New York Mercantile Exchange since August 2008, according to Dow Jones Market Data. Prices ended Thursday at $9.188, but were poised to end the week 4.8% higher.

The main reason for the natural-gas rally this week is the “sharply reduced flows from Russia amid a backdrop of only average stockpiles,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. “Even with inventories sitting near their five-year average right now, the fact that flows from Russia through Nord Stream 1 are trickling at just 20% of capacity means that even modest demand at the start of the winter will quickly begin to draw supply down,” he said. “Below-average temperatures could very well see supply quickly depleted.” Russia’s state-owned energy producer Gazprom said in late July that natural-gas exports through the vital pipeline to Germany would drop to 20% from 40% …

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