High Inventories Going Into Winter Cap Prices

Natural gas prices were generally higher on Friday but US saw them fall as data showed that there remains excess supply. European LNG rose 0.1% to EUR 36.63 after a high of EUR 37.40 and is now around 2% higher this month. Prices have been moderating as gas flows from Russia have been uninterrupted by Ukraine’s move into Russia. The heating season begins in just over a month and European inventories are at seasonally high levels.

• Ukraine won’t renew the agreement that allows Russian gas to flow through its territory to Europe. It expires at the end of 2024. Also the US has put new sanctions on Russia’s “shadow” ships, which have also been used to transport LNG from Russia’s newly opened Arctic 2 plant, which is also under US sanctions.
• US natural gas prices fell 1.2% to $2.03 and are lower again today at $2.01. They are down around 1.5% in August. Temperatures are forecast to be above average this week but the cooling season is approaching its end, which will reduce gas demand until heating begins.
• Lower-48 US gas production fell 0.1% y/y on Friday but demand was down 9.8% y/y.
• North Asian gas prices rose 1.5% on Friday to be up 8.5% in August to date due to supply disruptions from within the region in Malaysia and Australia.