Gas Prices Down In December, Red Sea Attacks Important For LNG Too

Natural gas prices are down across the globe this month with ample supplies and lacklustre demand. Although with the Red Sea/Suez Canal a significant waterway for LNG shipments, recent attacks on ships in the area and rising tensions in the region may put upward pressure on prices.

• On Friday European LNG prices rose 1% to be down almost 19% in December. The German regulator said that gas consumption is up 7.2% since October 1 on a year ago (+2.5% households and businesses, +11.1% industry). It believes that given the high level of inventories and steady imports, there are unlikely to be any shortages this winter.
• There are increasing concerns that tensions are spreading in the Middle East with the Iran-backed Houthis firing on shipping in the key Red Sea and the US striking Hezbollah targets in Iraq. Rerouting oil and gas shipments also adds to shipping costs.
• US prices rose 1.3% but then fell 1.6% yesterday to be down around 8.5%. They were lower on forecasts of warmer weather and data showing that output was steady in the second half of December, according to Bloomberg. The US is facing an oversupply of gas.
• North Asian gas prices have been flat but are down sharply this month.