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LNG: Gas Prices Higher On Trade Concerns & Cold Weather

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European natural gas prices rose 1.2% to EUR 53.85 to be over 10% higher this year on tariff worries. They fell to EUR 52.79 in early trading and then range traded after recovering. Storage levels at around 53% continue to worry the market especially as cold weather is likely to continue this week. 

  • Since Russia’s invasion of Ukraine, Europe has had to compete for global supplies of LNG. Asia has had a mild winter but it is now forecast to turn colder, especially in Japan, increasing its demand for heating. This could see European destocking continuing at a faster than usual pace adding further summer refilling pressures.
  • Europe has already proposed increasing imports of US LNG to avoid trade taxes. There are concerns that a trade war between the two would risk LNG supplies though. On Monday President Trump said he’d “definitely” impose tariffs on European imports, while the EU said it would respond.
  • US natural gas rose 8.7% on Monday to $3.31 boosted by forecasts for colder weather for the northern US in February, according to Commodity Weather Group. The market ignored the tariff news that rattled other assets.
  • Bloomberg notes that the spread between the March and April contracts turned positive signalling that the market is expected to be tighter at the end of winter.  
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European natural gas prices rose 1.2% to EUR 53.85 to be over 10% higher this year on tariff worries. They fell to EUR 52.79 in early trading and then range traded after recovering. Storage levels at around 53% continue to worry the market especially as cold weather is likely to continue this week. 

  • Since Russia’s invasion of Ukraine, Europe has had to compete for global supplies of LNG. Asia has had a mild winter but it is now forecast to turn colder, especially in Japan, increasing its demand for heating. This could see European destocking continuing at a faster than usual pace adding further summer refilling pressures.
  • Europe has already proposed increasing imports of US LNG to avoid trade taxes. There are concerns that a trade war between the two would risk LNG supplies though. On Monday President Trump said he’d “definitely” impose tariffs on European imports, while the EU said it would respond.
  • US natural gas rose 8.7% on Monday to $3.31 boosted by forecasts for colder weather for the northern US in February, according to Commodity Weather Group. The market ignored the tariff news that rattled other assets.
  • Bloomberg notes that the spread between the March and April contracts turned positive signalling that the market is expected to be tighter at the end of winter.