President Biden pledged an additional 15 billion cubic meters of natural gas exports to the European Union this year in the form of LNG, while the EU pledged to create the demand for 50 billion cubic meters annually of U.S. LNG "until at least 2030".
Before the mutual pledges, Europe had already become the largest buyer of U.S. LNG at the start of this year, taking in a record 12.5 billion cubic meters in the form of the super-chilled fuel. But there is a problem. Demand, especially from Europe, is set to rise sharply this year: Wood Mac expects European LNG to add 25 metric tons by the end of 2022. Global supply, on the other hand, is seen adding 17 million tons.
The signs of this imbalance are already visible in the United States. Last week, natural gas prices hit the highest level in 13 years, and while some analysts blamed it on the coal price rally, record LNG exports certainly contributed to the trend.
Natural gas prices are "sensitive to any near-term supply concerns created by events like a ban on Russia coal exports, abnormally cold weather," Tortoise portfolio manager Rob Thummel told MarketWatch last week. But perhaps more importantly, U.S. natural gas stocks have fallen.
For the week ending April 1, the Energy Information Administration reported that national natural gas stocks were 17 percent below the five-year seasonal average. The agency noted that stocks of working gas were within the five-year average, and yet prices continued to rise
