Gas Prices Rise As Relative Value Encourages Consumers Into Market

European LNG prices rose 3.4% to EUR 26.70 on Monday to be up 15.7% since February 23, when it appeared to trough. It reached a high of EUR 27.35 towards the end of the session. The increase in coal prices has meant some energy producers are looking to cheaper gas. The European Council has extended the goal of reducing gas consumption by a minimum of 15% compared to the 5-year average to March 2022 to the end March 2025.

• BloombergNEF expects gas demand to rise 2% y/y over the summer in Northwest Europe, Italy and Austria.
• US natural gas prices jumped 5.5% to $1.93 on Monday to be up 15.2% since February 16. They reached a high of $1.99 but couldn’t break through the key $2 level. The move was driven by EQT, the US’ largest producer, announcing it will cut production 5-7% to March due to the unseasonably mild winter and the resultant high inventories which have pushed prices lower. Chesapeake Energy and Comstock Resources have also decided to reduce output.
• US gas inventories are around 27% higher than the norms for this time of year, according to Bloomberg.
• Asian prices were also higher up 4.7% to be up 12.7% since February 23 as low gas and higher coal prices encourages buyers into the market.