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Global Natgas Prices Hold Geopolitical Risk Premium amid Strong Supply

NATURAL GAS

Global gas prices are holding their geopolitical risk premiums acquired since Hamas’ attack on Israel Oct. 7, despite robust global supply, Platts said.

  • Between Oct. 6-Oct. 18, JKM spot prices rose 48%, although between this had moderated to 21% by Nov. 2. European TTF prices were up 37% Oct. 6-Nov. 2 although had peaked at 71.4%.
  • "The global natural gas market might have priced in too high a risk premium on geopolitics and supply, when prices of other commodities that have similar risk exposure have not had such a premium," analysts at Citi Research said Nov. 1.
  • JP Morgan said the geopolitical risk premium could be stickier due to weather risks and uncertainty around peak winter weather demand, with one standard deviation weather event cutting European inventories by 9%.
  • Citi Research also said that gas price volatility was affected by low demand sensitivity and absent supply sensitivity, Platts reported.

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