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LNG: European Prices Higher As Cold Weather Drives Inventory Drawdowns

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European natural gas prices reached a high of EUR 49.32 early in the session and then trended lower but were still up 1.5% on Monday at EUR 48.54 supported by expectations of increased heating demand from cold weather. Gas inventories are concerning markets with withdrawals occurring at a faster rate than last year complicated by the expiry of the Ukraine transit deal at end-2024. 

  • European storage is currently around 85% full, 10pp lower than the same time last year. The EU target for February is 50% full. Europe has been competing with Asia for global supplies since Russia’s invasion of Ukraine.
  • The European Commission has said that energy supplies will be fine if Russian pipeline gas flows stop at the end of the year and it is helping member states to find other sources, according to Bloomberg. There had been talks with Azerbaijan to find an alternative route for Russian gas. The EC also observed that flows have been unaffected by the introduction of US sanctions on Gazprombank in November.
  • US gas fell 4.5% to $3.21 as forecasts shifted to warmer weather for the southern two-thirds of the US in mid-December, according to NatGasWeather. Temperatures are expected to return to their seasonal norms around the weekend after a snow storm across the Great Lakes. 
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European natural gas prices reached a high of EUR 49.32 early in the session and then trended lower but were still up 1.5% on Monday at EUR 48.54 supported by expectations of increased heating demand from cold weather. Gas inventories are concerning markets with withdrawals occurring at a faster rate than last year complicated by the expiry of the Ukraine transit deal at end-2024. 

  • European storage is currently around 85% full, 10pp lower than the same time last year. The EU target for February is 50% full. Europe has been competing with Asia for global supplies since Russia’s invasion of Ukraine.
  • The European Commission has said that energy supplies will be fine if Russian pipeline gas flows stop at the end of the year and it is helping member states to find other sources, according to Bloomberg. There had been talks with Azerbaijan to find an alternative route for Russian gas. The EC also observed that flows have been unaffected by the introduction of US sanctions on Gazprombank in November.
  • US gas fell 4.5% to $3.21 as forecasts shifted to warmer weather for the southern two-thirds of the US in mid-December, according to NatGasWeather. Temperatures are expected to return to their seasonal norms around the weekend after a snow storm across the Great Lakes.