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Investing.com - US natural gas prices soared Tuesday, climbing to their highest levels in two years in Europe on the back of supply issues as well as the underlying wintery conditions.
At 05:35 ET (10:35 GMT), natural gas prices rose 1.7% to $3.503 per million British thermal units, or MMBtu, climbing to levels last seen at the end of 2022.
Prices have almost doubled over the course of the last year.
“The upward rally was driven by rising demand following cooler weather conditions, ongoing supply disruptions, weaker power generation from renewables and low levels of inventory at 48.5% currently,” said analysts at ING, in a note.
The increase is a result of low temperatures depleting European gas reserves, with temperatures in many parts of northern Europe around or below zero.
These chilly conditions are expected to continue over the coming days, and the associated demand is set to cause European gas reserves - already at their lowest level since the start of the energy crisis in 2022 - to fall even further.
“Prolonged colder temperatures across Europe have intensified the need for heating eventually resulting in a faster depletion of inventories. Similarly, US natural gas prices edged higher in the week following the forecasts of cooler temperatures over much of the US,” ING added.
Also pushing prices higher is the threat of US tariffs, with President Donald Trump having already called on the EU to purchase more American oil and gas to avoid tariffs.
The US is already Europe’s largest supplier of liquefied natural gas.
Elsewhere, Ukrainian natural gas production facilities were damaged in a Russian attack on Ukraine’s central Poltava region overnight, the state-run oil and gas firm Naftogaz and Energy Minister German Galushchenko said on Tuesday.
The state-run operator of the gas transmission system said Ukraine would likely increase natural gas imports to more than 16.7 million cubic metres (mcm) on Tuesday from 16.3 mcm on Monday.