US natural gas producers and industry-related exchange-traded funds could benefit from the worsening energy crisis in Europe.
the First Trust Natural Gas ETF (NYSEArca: FCG) increased by 17.2% since the beginning of the year.
As Europe suffers an energy crisis with dwindling supplies from Russia and the threat of further sanctions reductions in response to a possible Russian invasion of Ukraine, European consumers have seen natural gas prices rise for heating and electricity production.
However, the price spike has been a boon to US liquefied natural gas (LNG) suppliers like Cheniere Energy Inc. and Cameron LNG, which are supplying record amounts of LNG to starving European markets, the the wall street journal reports.
The gas crisis in Europe began in the fall and sent prices soaring to record highs of over €180 ($205) per megawatt hour on December 21. Meanwhile, ships carrying US LNG to world markets changed course for Europe in response to lucrative prices, and in December the US overtook Qatar on a weekly basis to become the largest exporter. LNG market in the world for the first time. The United States supplied nearly half of the record 11.7 million metric tons of LNG supplied to Europe, according to trade news firm Kpler.
Meanwhile, tensions around Ukraine have also highlighted Europe’s growing reliance on Russian energy pipelines, which are seen as crucial to weaning economies off dirty coal and reducing carbon emissions while developing their sources of green energy.
“Russia is not shy about using Europe’s vast energy supplies as leverage for geopolitical gains,” EU High Representative Josep Borrell said after meeting US Secretary of State Antony Blinken in Washington on Wednesday. last week. “Our immediate priorities are to diversify energy sources, especially gas flows.”
Europe is also beginning to support the natural gas industry as a bridge between dirty fossil fuels and renewable energy sources.
“For buyers in Europe, the sense that there is political backing and policy support to enter into long-term gas contracts is very positive,” said Mike Sabel, managing director of Venture Global LNG Inc. ., at the WSJ.
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