Natural Gas Rises Amid Middle East Fighting and Oversupply Worries

The price of natural gas will likely stay in flux on the low end of the scale for a while longer, say experts. There are several factors at war with each other that are battling over natural gas rates.

US inflation is remaining high and continues to rise from month to month. The Federal Reserve refuses to cut interest rates right now because of those high inflation numbers, and they have yet to set a date for when rate cuts will happen. This has a back-and-forth effect on natural gas prices, as the economy struggles to recover but keeps getting hammered with negative inflation data.

Another factor that heavily affects natural gas prices is the amount of gas in reserves in oil refineries around the world. At the moment, there is an oversupply problem, and it is one that has continued for months. Few countries need much gas right now, and governments are ordering very little, while refineries sit on tons of gas that they cannot sell. They are forced to sell gas cheaply just to keep their businesses up and running.

When Will Supply Problems Improve?

We know that supply will decrease as demand increases as we get closer to the winter months. As the weather gets colder, there is more need for gas to keep everybody warm. Gas companies are struggling to come up with budgeting cuts to keep their companies in operation nutil then.

Tensions in the Middle East are still high, with attacks being carried out on Israel’s soil and against Hamas. The energy sector is watching the news there closely, as the constant attacks could cut into local energy supplies and global sources of oil as well. The hot zone there is likely to affect energy supplies in the near future.

Russian refinery attacks are also a source of concern for the oil industry. As Ukraine carries out its targeted attacks on Russian energy, they are damaging or destroying major oil refineries and hindering the Russians’ ability to keep up with the heavy demand for oil in their war against Ukraine.

If things go further south in either of these areas, we could see a supply crisis that seriously affects natural gas prices and moves the market considerably.