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LNG: Weather Drives Gas Prices Lower, Watching Middle East Developments Closely

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Natural gas prices were lower at the end of last week as concern over a supply disruption from the conflict in the Middle East waned. Also, European inventory levels are almost at 95% and autumn weather is expected to be mild next week. European LNG fell 1.4% to EUR 39.75, close to the intraday low of EUR 39.50 which followed a high of EUR 40.63. It is still up 1.8% in October to date.

  • While concerns over Middle East tensions have eased in gas markets, Europe remains nervous about disruptions to the Strait of Hormuz which 20% of global LNG shipments transit through and Iran controls. Israel is yet to retaliate for Iran’s October 1 missile strikes.
  • The US thinks that Israel looks likely to target military and energy sites in Iran in retaliation for its missile strikes on October 1, according to an NBC report. The timing of the response remains unknown. Iran has said that it will hit back forcefully and Israel’s gas facilities could be a target.
  • US natural gas fell 1.8% on Friday to $2.63 to be down around 10% this month. It has continued the move lower today and is currently around $2.59. It rose to a high of $3.02 on October 4. Hurricane activity in Florida has resulted in power outages and thus less gas demand. Temperatures are forecast to decline in the eastern US over October 16-20.
  • US lower-48 gas production fell 2.1% y/y on Friday and demand rose 0.9% y/y.
  • North Asian prices fell 1.6% on Friday to be down around 3% in October. Activity on No 2 production line at Australia’s Ichthys LNG export facility restarted last week, but Malaysia’s Bintulu plant has two trains offline. 
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Natural gas prices were lower at the end of last week as concern over a supply disruption from the conflict in the Middle East waned. Also, European inventory levels are almost at 95% and autumn weather is expected to be mild next week. European LNG fell 1.4% to EUR 39.75, close to the intraday low of EUR 39.50 which followed a high of EUR 40.63. It is still up 1.8% in October to date.

  • While concerns over Middle East tensions have eased in gas markets, Europe remains nervous about disruptions to the Strait of Hormuz which 20% of global LNG shipments transit through and Iran controls. Israel is yet to retaliate for Iran’s October 1 missile strikes.
  • The US thinks that Israel looks likely to target military and energy sites in Iran in retaliation for its missile strikes on October 1, according to an NBC report. The timing of the response remains unknown. Iran has said that it will hit back forcefully and Israel’s gas facilities could be a target.
  • US natural gas fell 1.8% on Friday to $2.63 to be down around 10% this month. It has continued the move lower today and is currently around $2.59. It rose to a high of $3.02 on October 4. Hurricane activity in Florida has resulted in power outages and thus less gas demand. Temperatures are forecast to decline in the eastern US over October 16-20.
  • US lower-48 gas production fell 2.1% y/y on Friday and demand rose 0.9% y/y.
  • North Asian prices fell 1.6% on Friday to be down around 3% in October. Activity on No 2 production line at Australia’s Ichthys LNG export facility restarted last week, but Malaysia’s Bintulu plant has two trains offline.