After a tumultuous few days for the world’s energy markets that saw fresh recession predictions and White House backing for a federal gas tax holiday, U.S. gasoline and commodities futures prices declined to conclude the week. Russia’s restriction of natural gas supply to Europe is raising prices for the continent, but U.S. markets are now experiencing some relief.
The Washington Examiner reported that the opening price for natural gas futures on Friday was $6.23 per MMBtu, down from almost $7 a week earlier. Since the $9.32 peak on June 6, prices have decreased by around 33%. The June 8 explosion and subsequent outage at Texas’s Freeport LNG facility, which has been shipping the majority of its liquefied natural gas volumes to Europe, have been credited by market experts for the drop in gas prices.
Freeport has a daily gas capacity of slightly over 2 billion cubic feet, but it won’t be fully operational again until late this year. According to Rystad Energy, the decline in gas demand for export has contributed to lower pricing. In response to further recession fears, U.S. crude oil futures also fell significantly during the last week. On Thursday, West Texas Intermediate lost more than 10% week over week before climbing back to almost $107 per barrel on Friday. Gas prices, which had earlier in the month reached record highs, have dropped along with oil prices and are now, on average, back to around $5 per gallon.
Financial analysts and economist Nathan Sheets of Citigroup assessed the likelihood of a recession at 50% Sheets said that a recession is more likely as a result of tough inflation-controlling measures taken by central banks and a slowed demand for consumer products globally. An economist from the financial firm Nomura stated that A recession in the fourth quarter of the year is “more likely than not.”