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High Inventories, Weak Demand Weigh But Disruptions Being Monitored

LNG
Energy BulletsCommodities

Natural gas markets were weaker on Friday with European prices down 1.4% to EUR 29.35 off the intraday low of EUR 28.83. They fell 4.6% last week but are still 7.4% higher in April. With storage at seasonally high levels, the market is currently not nervous about restocking for next winter with demand still weak. Price movements are still vulnerable to supply disruptions.

  • Russia and Ukraine continued to target each other’s energy infrastructure with Ukraine striking the Russian Slavyansk oil refinery resulting in its activity being partially suspended and Russia targeting Ukraine’s gas infrastructure which is used to supply other parts of Europe. The US is sanctioning new Russian LNG projects and Europe is looking to ban Russian LNG imports.
  • US natural gas fell 3.3% on Friday to be down 2.4% this month as high inventories pressure prices. The expiry of the May futures contract also weighed. Early May is likely to see warmer weather in the central and eastern US. Production was down 0.6% y/y and demand -1.9% y/y at the end of last week.
  • North Asian prices fell 1.3% but are up 8% in April as buyers entered the market.
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Natural gas markets were weaker on Friday with European prices down 1.4% to EUR 29.35 off the intraday low of EUR 28.83. They fell 4.6% last week but are still 7.4% higher in April. With storage at seasonally high levels, the market is currently not nervous about restocking for next winter with demand still weak. Price movements are still vulnerable to supply disruptions.

  • Russia and Ukraine continued to target each other’s energy infrastructure with Ukraine striking the Russian Slavyansk oil refinery resulting in its activity being partially suspended and Russia targeting Ukraine’s gas infrastructure which is used to supply other parts of Europe. The US is sanctioning new Russian LNG projects and Europe is looking to ban Russian LNG imports.
  • US natural gas fell 3.3% on Friday to be down 2.4% this month as high inventories pressure prices. The expiry of the May futures contract also weighed. Early May is likely to see warmer weather in the central and eastern US. Production was down 0.6% y/y and demand -1.9% y/y at the end of last week.
  • North Asian prices fell 1.3% but are up 8% in April as buyers entered the market.