Gas Prices Continue Moderating Given High Inventories & Few Disruptions

Natural gas prices continued to moderate on Wednesday as an Iranian attack on Israel continues to be delayed given ongoing Gaza ceasefire talks. Prices remain higher on the month though. European LNG fell 1.9% to EUR 37.01, close to the intraday low of EUR 36.83, but is still 3.8% higher in August. Concerns over disruptions to Russian gas flowing through Ukraine are abating as currently there hasn’t been an impact following Ukraine’s move into Russia’s Kursk region.

• European LNG peaked on August 12 at EUR 42.90 and has been trending lower since as the market is comforted by very high storage levels heading into the heating season on October 1. On August 19 they were at 90%, according to Gas Infrastructure Europe, 2 months ahead of schedule.
• Europe remains sensitive to outages though and an alternative is still to be found when the agreement for Russian gas transiting through Ukraine expires at year end. Norwegian flows have been steady but maintenance is due to begin soon and any unplanned extensions may make the market nervous.
• US natural gas prices fell 0.5% to $2.19. They are up 8% this month on optimism that demand would rise at the end of the cooling season.
• EIA gas inventory data is released later today. There have been excess demand concerns and the data is forecast to show a 25bcf increase last week, according to Bloomberg estimates. Inventories are around 13% above the 5-year average.
• Most of the US is forecast to have higher temperatures into early September which should boost power demand.
• North Asian prices fell 0.7% to be up 7.7% in August, as high prices discouraged Indian and Chinese buyers.