Gas Prices Lower On Solid Supply

Natural gas prices were lower last week due to consistent and uninterrupted supply but the market remains sensitive to outages and increased demand in other parts of the world. European prices fell 0.6% to EUR 33.07 on Friday to be down 4.2% on the week. They reached a high of EUR 33.98 early in the session and then trended lower.

• May industrial output in the euro area was weak and the spring/summer has been mild keeping gas demand subdued. The manufacturing PMI suggests this should continue. Temperatures are forecast to rise this week in northwestern Europe though, according to Bloomberg.
• US natural gas fell 3.6% to $2.33 to be down 10.4% last week and are steady so far today despite the imminent arrival of Tropical Storm Beryl in Texas. High storage levels continue to weigh on prices. Production rose 0.6% y/y on Friday and demand 3.1% y/y.
• The Freeport liquefaction plant in Texas has reduced output given Tropical Storm Beryl is due to reach the coast today. Around 14mn cubic feet/day of natural gas has been in the path of the storm.
• North Asian prices rose 1.3% due to the return of warmer weather but were still down 4% on the week. BloombergNEF expects Asian LNG demand to rise 2% m/m in July driven by cooling demand in China. It believes demand from Japan and South Korea will fall as they use inventories and in India as the heat moderates.