Natural gas prices are expected to remain high and even continue to rise when the high demand for the resource is above the physical ability to meet supply targets, according to experts in the field. The price of natural gas now stands at $ 8.7, and this price is expected to jump by another 15% by the end of next year.
“The increase in capacity to supply the resource is small, and we see no way to supply more natural gas at least until this time next year,” notes Peter McNally, an energy expert at Third Bridge.
The energy crisis, according to experts, is mainly affected by a shortage of equipment and manpower as well as a lack of investment work in the sector, which is expected to raise natural gas futures to about $ 10. Experts also note that in some areas of the US, the price of gas is expected to skyrocket to $ 30 due to the lack of transport capacity.
According to McNally, investors who would be interested in enjoying the expected expected rise in gas prices should purchase January contracts for natural gas. On the other hand, in his estimation, these will also be able to purchase the American ETF
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(NYSE: UNL), which includes oil futures for the coming year with varying expiration dates.
Natural gas prices have risen 130% since the end of last year, when the resource was sold for $ 3.73. At least part of the increase is reflected in the lack of natural gas resources, with data released last May showing that gas resources stand at 1.8 trillion feet delayed, compared to 2.2 trillion rubles about a year ago and compared to an average of 2.1 trillion rubles over the past five years. According to the U.S. Energy Authority. According to many experts, this crisis is not expected to be resolved any time soon.
Many in the sector estimate that the main difficulty was to lead the relevant manpower to carry out the necessary work in the oil and gas fields. The addition of sand for hydraulic breakage or unloading has also been a trick for many suppliers in the field and has led to a shortage of resources.
Meanwhile, another problem has arisen in recent years. For years, when natural gas prices were on the floor, Wall Street investors persuaded energy companies to prefer dividend distribution and repurchase of shares over investment in research and development. Gas prices fell below $ 1.6 in March 2020, when that price was above $ 13 during the 2008 economic crisis.
Now that those same companies are investing less money in the reality of new energy sources, there are fewer sources from which they can start distilling new natural gas in order to cover the gap created in the field. In other words – those energy companies will have a very hard time dealing with the high demand for natural gas when they have no ability to distill gas from new sources.
On the other hand, the demand side is now in many difficulties as well. The Russian invasion of Ukraine led the Union to make a decision to boycott Russian oil and thus the Union was forced to find for itself non-Russian sources for natural gas. This replacement is coming, mostly from the U.S. Experts in the field believe that close to 12-13 billion rubles of oil arrive in Europe every day.
Although this level is not expected to rise now because Europe does not have the resources to convert natural gas to ordinary gas and then disperse it as ordinary gas, the demand for the resource is expected to grow through other factors, according to Jay Hatfield, CEO of Infrastructure Capital According to him, sodium-based foods require natural resources in order to be produced.
In the past, Europe obtained the resource from the Russians themselves. Now, everything connected to the Kremlin is out of bounds, so American energy sources will have to provide the alternative.
Although the forecast for resource prices is very bearish, a recession is expected to send the resource down rather than up, due to the fact that energy use is in high correlation with the performance of the economy itself.
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We have the whale
The Leviathan
03/06/2022
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045% of New-Med Energy will soon export to Europe
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