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LNG: Prices Higher As Global Competition For Supplies Remains Strong

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European LNG prices rose 1.6% to EUR 35.75 after rising to EUR 36.19, but they are down over 10% in September to date. Since Russia’s invasion of the Ukraine, the region has become reliant on global supplies and Egypt’s purchase of 20 cargoes for Q4 at a premium to European prices rattled markets on Friday. The heating season begins on October 1 and while European storage is around 93% full, it will face significant competition if winter is particularly cold.

  • Russian gas flows to Europe through Ukraine continue as normal. There is material uncertainty when the agreement that allows this expires at year end.
  • European industrial demand is likely to remain weak though with manufacturing PMIs below 50 and July euro area IP down 0.3% m/m and 2.2% y/y.
  • US natural gas prices fell 2.7% to $2.29 to be up almost 8% this month. Prices were pressured on Friday by the resumption of production following Hurricane Francine. The time of year is also not supportive of gas prices being between heating and cooling seasons. Maxar is forecasting temperatures higher-than-average over the coming 2 weeks. Storage levels remain elevated but are moderating towards the 5-year average.
  • Hurricane Francine shut in 52% of natural gas production in the Gulf of Mexico, according to Bloomberg.
  • Lower-48 US gas production was down 1% y/y while demand rose 0.1% y/y. Texas’ Freeport LNG facility saw a 1bcf/d increase in gas supplies on Friday from BNEF’s LNG Feedgas Model. 
  • North Asian prices rose 2.1% but are down 8.3% in September. Demand remains robust with China, South Korea and Bangladesh looking for shipments. 
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European LNG prices rose 1.6% to EUR 35.75 after rising to EUR 36.19, but they are down over 10% in September to date. Since Russia’s invasion of the Ukraine, the region has become reliant on global supplies and Egypt’s purchase of 20 cargoes for Q4 at a premium to European prices rattled markets on Friday. The heating season begins on October 1 and while European storage is around 93% full, it will face significant competition if winter is particularly cold.

  • Russian gas flows to Europe through Ukraine continue as normal. There is material uncertainty when the agreement that allows this expires at year end.
  • European industrial demand is likely to remain weak though with manufacturing PMIs below 50 and July euro area IP down 0.3% m/m and 2.2% y/y.
  • US natural gas prices fell 2.7% to $2.29 to be up almost 8% this month. Prices were pressured on Friday by the resumption of production following Hurricane Francine. The time of year is also not supportive of gas prices being between heating and cooling seasons. Maxar is forecasting temperatures higher-than-average over the coming 2 weeks. Storage levels remain elevated but are moderating towards the 5-year average.
  • Hurricane Francine shut in 52% of natural gas production in the Gulf of Mexico, according to Bloomberg.
  • Lower-48 US gas production was down 1% y/y while demand rose 0.1% y/y. Texas’ Freeport LNG facility saw a 1bcf/d increase in gas supplies on Friday from BNEF’s LNG Feedgas Model. 
  • North Asian prices rose 2.1% but are down 8.3% in September. Demand remains robust with China, South Korea and Bangladesh looking for shipments.