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This article is more than 1 month old.

Natural gas prices fall 19% from multi-year highs in US; why and what it means for India

Mini

A warm autumn in the US has kept natural gas prices down. That is unlikely to key down Indian fuel prices though, as the country produces most of its own gas.

Natural gas prices fall 19% from multi-year highs in US; why and what it means for India
Natural gas prices are sliding, at least in the US. The commodity dropped 19 percent from its 13-year high recorded earlier in the month. In Europe, gas remains in short supply and prices volatile. Unstable international coal prices and domestic coal shortages in China and India are only adding fuel to the energy crisis, while oil prices trend high.
Why US is insulted from price hikes?
The US remains mostly insulated from the increase in fuel prices, with the country being the largest producer of natural gas in 2020 at 914.6 billion cubic meters. It is also the third-largest producer of coal and the leading producer of oil in the world, ahead of nations like Russia, Saudi Arabia, with 19.51 million bpd.
Thanks to its strong domestic supply, the country has mostly avoided falling into external energy dependencies like Europe, India and China. What had concerned analysts and experts was the low stockpile of natural gas, which is widely used by residents to warm their homes in the winter.
However, with the start of the autumn season in the US, and temperatures higher than usual, the fears of a shortage seem unfounded for now. The US Energy Information Administration said it received 33 percent more surplus natural gas than expected for its stockpile. This continues the weekly positive numbers of surplus gas, with the stockpile deficit shrinking to just being 4.2 percent.
What’s in the future?
With the weatherman forecasting a warmer-than-usual winter for the country, natural gas prices are not expected to see a huge upswing. Prices are expected to increase, but moderately, as deep winter sets in and heating needs rise.
Lower prices in the US, however, will not offer much relief to the rest of the world. With European stockpiles still critically low in many areas, much of the excess natural gas is expected to be bought by European markets.
What about India?
For India, the trend in the US will have minimal impact on fuel prices. With the country producing a majority of its natural gas domestically, and not importing from the US, the price fall is not expected to affect domestic prices. Indians mostly use natural gas for cooking.
Natural gas contracts in India were still trading in the green, with very little reason to suggest that the commodity would see a downward movement anytime in the short term.
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