Gas Prices Continue Trending Down As Inventories High

Wednesday’s rally didn’t extend into Thursday as European LNG prices fell 4.7% to EUR 28.83 as demand remains lacklustre. They trended lower through the session after reaching a high of EUR 30.89 early on. News yesterday that a ceasefire deal between Israel and Hamas is in the pipeline has also reduced energy prices.

• European storage levels remain high and the continent is unlikely to have supply shortages over the rest of the winter and early spring, despite colder weather forecast for later in February.
• ICIS commented that European industrial gas usage rose 11% in January but is still 14% below the 5-year average.
• The decision to require US gas exports to be assessed for their impact on climate change has rattled the Europeans and they have visited the US in response. The issue remains a concern for the market too.
• US natural gas prices fell 2.4% after stocks fell less than expected. They are 5.1% above the 5-year average due to mild winter, according to Bloomberg. Weather forecasts from Atmospheric G2 are suggesting that above average temperatures will continue across the east coast in the second week of February.
• North Asian prices fell 0.7%. Shell expects that demand from China will be strong after the Lunar New Year holiday, as the market tightens with new gas power generation coming online, according to ANZ.