Robust Asian Demand Supports Prices

European LNG prices rose 3.4% to EUR 32.62 on Wednesday, close to the intraday high of EUR 32.98, but are still down over 5% in July. Europe now competes with Asia for supplies since Russia’s invasion of Ukraine, and increased demand from India and Egypt added pressure to European gas prices.

• Investment fund net longs in Dutch gas futures rose close to 4% last week, according to Intercontinental Exchange.
• The preliminary July euro area manufacturing PMI fell further into contractionary territory at 45.6 but growth in the UK increased with the PMI rising to 51.8. Industrial demand across the continent remains soft and with storage at over 83% the market remains well supplied but vulnerable to disruptions.
• Europe has become more dependent on Norway but flows have picked up again after some unplanned extensions to maintenance. Equinor, Norways’ largest producer, reported that its Q2 flows increased 13% y/y, according to Bloomberg.
• Russian gas output rose 8.2% in H1 2024 with shipments to Europe and China increasing, according to Bloomberg.
• US natural gas fell 2.5% to $2.13 to be down 18% this month as flows remain robust. Output continues to resume from Freeport’s LNG facility following damage from Hurricane Beryl.
• North Asian prices rose 2.7% to be down only 1.6% in July, as demand from India and Japan remains strong due to the hot summer. China’s 2024 consumption is forecast to be in line with last year as demand picks up to around 6.5-7.7% y/y, according to the National Energy Administration.