The primary element influencing the price of natural gas, an energy resource, is the balance between supply and demand. Knowing what affects the supply-demand balance is crucial.

Geopolitical risk: The end of February 2022 saw the start of a confrontation between Russia and Ukraine, which had a big effect on natural gas prices. By way of pipelines through Ukraine, Russia provides around one-third of the natural gas used in Europe. Natural gas prices spiked briefly as a result of worries that the fighting may cause a short-term imbalance between supply and demand throughout Europe. Then, throughout the summer, natural gas prices climbed as a result of a surge in demand ahead of the impending “energy crisis.” The following is how “geopolitical risks”, such as wars, conflicts, and political instability in producing countries have a significant impact on the price of natural gas.

Stockpiling and storage: Natural gas is kept underground in storage facilities situated in exhausted oil and gas sources in Europe and other nations. By absorbing demand variations in the summer and winter and assuring supply during peak times, this helps to assure a consistent supply. The natural gas price is impacted by this storage scenario.

Economic trends: Economic trends and energy prices are tightly connected. The production of industrial goods will rise as the economy strengthens and recovers, which will raise demand for energy sources like coal, crude oil, and natural gas and drive up costs.

Supply and demand of other fossil fuels: After coal and oil, natural gas has long been the third-largest energy source. We have consistently grown our market share by responding to excesses and shortfalls in the supply and demand balance for coal and oil. One of the characteristics of natural gas is its susceptibility to changes in the supply and demand for coal and oil. Naturally, this will also have an impact on the cost.