Gas Prices Continue To Fall, New EU Moves Against Russia May Tighten Market

European LNG trended lower through trading on Friday with prices closing down 2.8% to EUR 38.84, close to the intraday low of EUR 38.54. It was pressured by a forecasted shift to milder weather this week and continued soft demand.

• The EU has come to an agreement to allow its members to block gas imports from Russia and Belarus. It was part of a deal that included standardised rules on natural and renewable gases and hydrogen. Currently there aren’t EU-wide sanctions against Russian gas since its invasion of Ukraine. There has been a sharp drop in pipeline flows from Russia but LNG shipments have soared. This development is an attempt to reduce those imports but still needs to pass in the European Parliament.
• The gas market is concerned that this legislation will tighten the market as Europe works to refill storage post the winter.
• US natural gas fell 1.3% on Friday to be down 8.9% this month, despite lower stocks but oversupply remains considerable. Mid-December is also expected to see slightly warmer weather in the US.
• North Asian prices fell 0.5% to be down 1% in December to date. There is the prospect that Woodside and Santos will merge, which would create one of the largest LNG exporters in Asia, according to ANZ.