Sunday, March 04, 2012

Gas price movements - Europe and the USA

US natural gas prices have behaved very differently from European and other gas prices during 2011. US prices [Henry Hub spot prices, Louisiana, fell significantly over this period, from $162 to $114 / 1000m3, whilst European prices [Russian gas, delivered to German border] rose markedly, from $331 to $436 / 1000 m3. For actual prices, see for prices in Europe and for prices in the United States.

The difference in price behaviour seems to be explained by the shale drilling boom in the United States - which may soon swell the nation’s underground storage network - and which is resulting in excess gas supply.

Nonetheless, with a difference in prices that is now close to four-fold, it seems clear that regional supply and demand has a major influence on the pricing of this particular commodity.

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