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Natural Gas Near 2008 Peak As Global Power Crunch Ripples Through Energy Markets

Soaring natural gas prices in Europe have buyers looking to U.S. exporters for relief as the global power crisis ripples through energy markets.

Natural Gas traded near seven-year highs Tuesday, after scaling to record peaks in Europe, as the global power crunch boosted prices for energy commodities in markets around the world. 

An unusually low season for wind power generation in Europe, coupled by the closure of coal and nuclear plants around the region, has added to prices pressures already exacerbated by a surge in post-pandemic demand. That, in turn, has led buyers to U.S. markets, where supplies remain hindered by the impact of Hurricane Ida.

U.S. suppliers could struggle to meet European demand, however, as storm and maintenance outages trimmed the country's collective 10.5 billion cubic feet capacity. 

"Low stockpiles of most fuels, and limited time left to replenish stocks before the peak demand season, has left consumers around the world increasingly exposed to a supply crunch should we end up with a colder than normal winter," said Saxo Bank's chief commodity strategist Ole Hansen. "With gas and coal trading at very elevated levels we are now seeing the next stage of this energy crunch with crude oil prices rising as well." 

"The global supply crunch will drive increased demand for US LNG exports, thereby also raising concerns about tightening inventory levels in the US," he added.

Natural Gas futures for delivery on October 21 have risen some 30% over the past four days to a near seven-year high of $5.90 per million British thermal units (mmBtu), near to both the highest in seven years and the peak prices levels of 2008.

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EQT Corp.  (EQT) - Get EQT Corporation Report, the country's biggest natural gas producer by volume last year, was marked 0.65% higher in pre-market trading Tuesday to indicate an opening bell price of $22.50 each. 

Chesapeake Energy  (CHK) - Get Chesapeake Energy Corporation Report jumped 2.22% to $63.87 while rival Devon Energy  (DVN) - Get Devon Energy Corporation Report gained 1.6% to change hands at $35.65 each. 

In Europe, where surge in autumn demand, a lack of capital investment linked to a green energy drive and unsteady supplies from Russia have boosted prices to as high as $29 per mmBtu, extending a five month surge past 1,300%.

Energy switching strategies, meanwhile, have lead to a big leap in coal demand, which has pushed prices for delivery in Rotterdam to around $155 per ton, more than double the recent average. 

Oil is also on the rise, extending its recent rally to a sixth consecutive session, as energy switching -- and the lowest levels of domestic supplies since 2018 -- take U.S. crude past $75 a barrel.

WTI futures for November delivery traded 53 cents higher to start the session at $75.98 per barrel while brent contracts for the same month, the global pricing benchmark, were up 37 cents at $79.90 per barrel.

Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report shares were up 1.4% at $60.11 each while Chevron  (CVX) - Get Chevron Corporation Report rose 1.3% to $104.30 each.