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Citi says that natural gas prices could quadruple from current levels in a chilly winter

Citi argues that natural gas prices could surge to $100 per mmbtu in the event of a frigid winter

The firm has more than doubled its forecasts for natural gas prices in Asia and Europe, warning that things are about to go wild in the energy market this winter:

“Global natural gas prices could continue to go parabolic in the coming weeks and months. Strong demand and a lack of supply response have sharply tightened the market. Any surprise demand surge or supply disruptions could propel price further upward.”

Adding that average prices in Q4 will be moderately higher than the levels outlined in their base case pointed out above. And that the spillover effects will also likely cause prices in other fuels to also surge higher in a particularly cold winter season.

However, they view the surge to be transient – logically – and that prices will eventually fall 70% by Q3 next year from the coming winter’s levels.

For some context, Asia and European natural gas prices are seen close to $25 per mmbtu in recent weeks. So, a surge to $100 is four times where we are at now and equivalent to oil jumping to $580 per barrel by comparison.Invest in yourself. See our forex education hub.

LNG

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