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LNG: High European Gas Prices Increasingly A Concern

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Forecasts for cold weather have driven US and European natural gas prices higher. Europe rose 4.5% on Monday to EUR 58.24 to be up 9.4% already in February. High gas prices are resulting in shifts to oil for heating and driving concerns over summer/spring refilling especially as storage levels are at a 3-year low. Cold weather, less wind-power and the end to Russian pipeline flows through Ukraine have driven the drawdowns. 

  • European natural gas futures are around $5 higher through the coming summer months than next winter ahead of the storage deadlines. This is discouraging purchases for refilling and a number of governments are looking at intervening, which may cause its own problems. There are also concerns regarding the impact of high energy prices on already struggling European industry and households.
  • US natural gas rose 4% yesterday to $3.44 to be up 13% this month driven by forecasts from Atmospheric G2 for colder weather in the eastern and central US in mid-February. Prices had previously eased on confidence that supplies would be adequate to meet heating demand over the rest of the winter.
  • On Monday tariffs of 15% were imposed by China on US LNG imports in retaliation for the US’ universal 10% tariff on imports from China. US shipments are expected to be diverted to other regions, especially Europe, resulting in little disruption to US suppliers.
  • India has now joined Europe in discussing with US President Trump the possibility of buying more US LNG to try and deflect targeted US tariffs. PM Modi is due to meet with Trump this week. 
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Forecasts for cold weather have driven US and European natural gas prices higher. Europe rose 4.5% on Monday to EUR 58.24 to be up 9.4% already in February. High gas prices are resulting in shifts to oil for heating and driving concerns over summer/spring refilling especially as storage levels are at a 3-year low. Cold weather, less wind-power and the end to Russian pipeline flows through Ukraine have driven the drawdowns. 

  • European natural gas futures are around $5 higher through the coming summer months than next winter ahead of the storage deadlines. This is discouraging purchases for refilling and a number of governments are looking at intervening, which may cause its own problems. There are also concerns regarding the impact of high energy prices on already struggling European industry and households.
  • US natural gas rose 4% yesterday to $3.44 to be up 13% this month driven by forecasts from Atmospheric G2 for colder weather in the eastern and central US in mid-February. Prices had previously eased on confidence that supplies would be adequate to meet heating demand over the rest of the winter.
  • On Monday tariffs of 15% were imposed by China on US LNG imports in retaliation for the US’ universal 10% tariff on imports from China. US shipments are expected to be diverted to other regions, especially Europe, resulting in little disruption to US suppliers.
  • India has now joined Europe in discussing with US President Trump the possibility of buying more US LNG to try and deflect targeted US tariffs. PM Modi is due to meet with Trump this week.