U.S. natural gas prices plummet as cold weather approaches

U.S. natural gas prices fell Friday afternoon on expectation that U.S. temperatures are expected to cool soon.

Natural gas futures fell to $8.076/MMBtu (-2.79%) as the Global Forecast System predicted cold weather was in store next week for the Great Plains and eastern US. United, and the following week in the West Mountain and the East Coast.

Natural gas prices today are still more than double what they were this time last year, double the levels they started the year with and the highest in more than a decade.

Natural gas prices were also pushed lower by EU approval of companies opening special ruble accounts at Gazprombank to pay for Russian gas.

Even if EU members find a way to continue their purchases of Russian gas, the balance between supply and demand for natural gas is expected to remain tight for the rest of the summer, although US production is higher what it was at this time last year.

The United States is exporting natural gas to gas-hungry Europe as the latter seeks to reduce its dependence on Russian gas supplies. These higher exports have helped push up prices, combined with abnormally hot temperatures in parts of the United States, adding to the call for cooling. On the list of things pushing natural gas prices above the $8 market is natural gas inventories that are 20% lower than they were this time last year.

Today’s drop in natural gas prices, however, is expected to be short-lived, with the EIA forecasting that natural gas delivered to power generators will cost an average of nearly 9 MMBtu this summer between June and August.

By Julianne Geiger for Oilprice.com

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