May 23, 2024 00:05 GMT
Gas Prices Rally As Demand Rises & Supply Concerns Persist
LNG
European LNG prices rose for the fifth straight day up 5.3% on Wednesday to EUR 34.77, close to the intraday high of EUR 34.83. They are now 19.4% higher this month.
- The sharp increase in European prices on Wednesday was driven by the warning from Austria’s energy supplier OMV AG that there could be disruptions to supplies from Russia’s Gazprom as a case had been won that could block its payments to Gazprom thus stopping flows. High storage levels and Europe’s general shift away from Russia should limit the impact.
- There is likely to be increased cooling demand from Europe too with warm weather forecast for northern Europe for next week. According to S&P Global commodity Insights usage across the largest six countries rose 10% y/y in May up from 4% in March.
- Norwegian flows have begun to pick up as expected following planned maintenance.
- US natural gas rose 4.8% yesterday to $2.80 but is currently lower at $2.78. Prices are now up almost 40% in May as producers have cut output and in anticipation of increased cooling demand. The EIA reports gas inventories later today and analysts expect an 85bcf increase, according to Bloomberg.
- North Asian prices are 2.5% higher to be up 18.9% in May. Cooling demand and concern over supplies has pushed up purchases. India’s Petronet has said that the heatwave has increased its LNG demand and India’s usage could rise around 20% this year, according to ANZ.
237 words