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LNG: Heating Demand To Rise As Cold Snap Spreads Across Europe

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European natural gas prices rose 1.3% on Tuesday to EUR 47.92, the intraday high, but are still down 2% this month. There has been downward pressure from technicals and positioning but cold weather is accelerating withdrawals of fuel from storage which drove prices higher yesterday.  

  • Bloomberg is reporting that large parts of Europe are forecast to have the coldest weather in four years, including Spain. According to Weather Services International -15C is forecast for Salzbug on Monday and -7C in Madrid. Gas storage levels are under 70% and the spread of the cold snap across the region is likely to accelerate the drawdown as heating demand increases.
  • US natural gas fell 6.2% to $3.44 on Tuesday and is now down 5.2% this month. It sold off as forecasts indicated that there will be some reprieve from the current freezing weather over January 17-18, according to NatGasWeather.
  • Later today EIA US inventory data is released and is forecast to show a 42 bcf drawdown compared to the 5-year average of -93 bcf for the same week. As of December 27, stocks were around 4.7% above this average, according to Bloomberg.
  • There has been less demand from Asia due to a mild winter with some reselling in China, according to ENN Group. Japan is also in the process of restarting nuclear power. This is good news for Europe who competes with Asia for global LNG supplies. Although 2024 saw record LNG imports into Asia. 
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European natural gas prices rose 1.3% on Tuesday to EUR 47.92, the intraday high, but are still down 2% this month. There has been downward pressure from technicals and positioning but cold weather is accelerating withdrawals of fuel from storage which drove prices higher yesterday.  

  • Bloomberg is reporting that large parts of Europe are forecast to have the coldest weather in four years, including Spain. According to Weather Services International -15C is forecast for Salzbug on Monday and -7C in Madrid. Gas storage levels are under 70% and the spread of the cold snap across the region is likely to accelerate the drawdown as heating demand increases.
  • US natural gas fell 6.2% to $3.44 on Tuesday and is now down 5.2% this month. It sold off as forecasts indicated that there will be some reprieve from the current freezing weather over January 17-18, according to NatGasWeather.
  • Later today EIA US inventory data is released and is forecast to show a 42 bcf drawdown compared to the 5-year average of -93 bcf for the same week. As of December 27, stocks were around 4.7% above this average, according to Bloomberg.
  • There has been less demand from Asia due to a mild winter with some reselling in China, according to ENN Group. Japan is also in the process of restarting nuclear power. This is good news for Europe who competes with Asia for global LNG supplies. Although 2024 saw record LNG imports into Asia.