Excess Supply Concerns Drive Prices Lower Again

European LNG gave up some of its gains on Wednesday to be down 4.4% to EUR 26.26 as stocks remain well above seasonal norms and demand soft. It reached a high earlier in the session of EUR 28.61. It is now 12.7% higher than February 22 as historically low prices have encouraged consumers into the market.

• A Barbados-flagged bulk carrier was hit by Houthi rebels in the Gulf of Aden on Wednesday killing two crew members for the first time. The market looked through the event though. The US and UK reiterated that it will act to protect shipping in the area. Qatar has already diverted its LNG shipments around southern Africa but it looks like the situation in the region is unlikely to be settled soon.
• Pipeline flows from Norway to the UK and northwest Europe have resumed after unplanned outages.
• US natural gas prices fell 1.5% on Wednesday to $1.93 but are still up almost 15% since mid-February. Cuts to production have driven prices higher but yesterday excess supply concerns while temperatures are above average drove markets lower. Inventory data is out today and Bloomberg consensus expects a 40bcf drop on the week.
• North Asian prices fell 2% in line with other markets but are still around 12% higher than February 22, as utilities switch to gas for its relative value versus coal.