Tight Gas Market Means Disruptions To Continue Causing Volatility

European and Asian natural gas prices look like they will finish August up on the month. European LNG fell 1% on Wednesday to EUR 38.30, the intraday low, but is still 6.8% higher this month. The market is watching Norwegian maintenance but with storage levels elevated it is not too concerned at this point. But increased competition with Asia for global supplies contributes to price volatility.

• Norwegian maintenance for the end of August had been scheduled but additional work was added this week. Unplanned extensions remain a risk to LNG prices with Norwegian flows at their lowest since June, according to operator Gassco. Flows through Ukraine remain a key uncertainty too.
• The International Gas Union reported that the global gas market is tight with no new significant supply additions this year, thus the market is likely to stay volatile, according to Bloomberg.
• US natural gas rose 1% to $2.10 but is still down 2.6% in August on continued excess supply concerns as the months between cooling and heating seasons approach. Parts of the US should see warmer weather at the start of September though, according to Atmospheric G2.
• Bloomberg consensus expects US gas inventories rose 34 bcf last week. In mid-August storage was 12.6% above the 5-year average, according to Bloomberg.
• North Asian prices rose 0.7% to be almost 12% higher this month. There are regional disruptions with a train out at Australia’s Ichthys LNG export terminal with shipments not expected to resume until October