- Natural gas prices fell 10% on Tuesday to levels not seen since September 2020.
- Prices in the United States fell to a low of $2.06 per million BTUs, representing a 79% drop from its August high.
- The drop in natural gas prices can be attributed to a mild winter which led to a drop in demand.
Natural gas prices continued their precipitous decline on Tuesday as energy commodities plunged to levels not seen since September 2020.
U.S. natural gas prices fell 10% to a low of $2.06 per million BTU on Tuesday, down 79% from its August high.
Russia invasion of Ukraine almost a year ago sparked a spike in prices for natural gas and other commodities as it became clear that Europe should finally stop buying from Russia and find other sources amid an onslaught of economic sanctions.
To prepare, Europe has been building up its fuel reserves to prepare for a potentially dire winter scenario in which cold weather would trigger high demand and lead to dwindling supplies and soaring prices.
But an exceptionally mild winter helped Europe avoid those fearsas demand for the commodity has not proven to be as strong as it would be in a particularly cold and prolonged winter.
This has led to a surplus of the goods which takes up more and more storage space. after Europe hoarded the supplies.
The combination of weak demand and growing supply for natural gas is a dynamic that Chesapeake CEO Nick Dell’Osso warned last month, as natural gas prices traded just over $3.00. Dell’Ossoa said natural gas producers should cut production to avoid a downward price spiral.
“Gas supply growth is not necessary in the short term. We believe the industry should recognize this and could reduce growth in the short term,” Dell’Osso said. said in an interview last month.