Gas prices are plummeting - this is good news for the economy

This morning, the March US natural gas futures series traded below $2. These are the lowest levels since October 2020, representing a decrease from the peaks in August 2022 by about 80%. This is very good news for the economy.

Gas under pressure due to the weather

Prices natural gas whether in the United States or Europe, they are under a lot of pressure mainly due to the above-average air temperature this winter. In addition, weather forecasts still seem to indicate that this state of affairs will continue. Above-normal temperatures are expected across the eastern and southern US until February 26. Relatively warm temperatures this winter have boosted natural gas inventories in Europe and the US, with gas storage facilities in Europe now 66% full as of February 13, well above the 5-year seasonal average of 46%. US natural gas inventories are also 8,8% higher than the 5-year average on Feb. 10. Such information may not have a positive impact on the gas market, but it does help to reduce electricity prices in the US, which is 38 percent renewable. it comes from gas.

According to the latest forecast, this week's frosty air could affect the western and northern parts of the US on Friday and Saturday, but the southeast could see many days significantly warmer than average starting Wednesday. This is summed up by Forecaster Maxar Technologies, which said on Tuesday that above-normal temperatures are expected next week for more than 60 percent of the country. US surface. Latest data EIA showed US stocks were 2,266 bcf as of February 10, 328 bcf higher than last year and 183 bcf above the five-year average. Meanwhile, the volume of gas flowing to the US LNG export facility rose to a 10-month high due to a surge in flows to the Freeport LNG export facility as the facility prepared to end an 8-month fire shutdown in June 2022.

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In turn, in Europe, as Eurostat reported on Tuesday, the consumption of natural gas in the EU fell by 19,3 percent. in the period from August 2022 to January 2023 compared to the same time frame, but in 2017-2022, Eurostat reported on Tuesday. According to the report, in the period from August 2022 to January 2023, among EU countries, the smallest decrease in natural gas consumption was recorded in Ireland (0,3%), while consumption fell the most in Finland (57,3%), Lithuania ( 47,9 percent) and in Sweden (40,2 percent).

This is good news for the economy

As a result, the fall in gas prices seems to be good news for the economy and for enterprises, as it will help reduce their operating costs at a time when the final demand for their goods is expected to fall. On the other hand, the decline in energy prices means that inflation may fall faster to the target of central banks.