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LNG: US Energy Policy Uncertainty Driving Market Volatility

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European natural gas rose 2.5% on Friday to EUR 47.40 to be up 5.3% last week, as cold weather, uncertainty around US energy and trade policies from the new administration drove prices higher. Withdrawals from storage in Europe have been faster this winter than last year’s and with the end of flows from Russia through the Ukraine, the region is becoming more reliant on global LNG supplies from both the US and Russia.

  • There is growing pressure in Europe to reduce LNG imports from Russia, while the future of US sanctions is currently cloudy. The mild winter in Asia is helping it to access LNG from other exporters.
  • US natural gas prices fell sharply on Friday driven by forecasts for warmer weather around month end. They fell 8% to $3.92 to be down 1.8% last week but still almost 8% higher on the month, which drove some profit taking. CFTC net longs rose 158.3% last week.
  • Lower-48 US gas output increased 8.6% y/y as of Friday, while demand fell 23.1% y/y.
  • President-elect Trump has said that he will remove the pause on licences for new LNG export facilities imposed by Biden and the ban on new drilling around much of the US coast, but this will require a vote in Congress. The start of his term is expected to drive volatility in energy markets.
  • China’s December LNG import volumes fell 13.9% y/y. 
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European natural gas rose 2.5% on Friday to EUR 47.40 to be up 5.3% last week, as cold weather, uncertainty around US energy and trade policies from the new administration drove prices higher. Withdrawals from storage in Europe have been faster this winter than last year’s and with the end of flows from Russia through the Ukraine, the region is becoming more reliant on global LNG supplies from both the US and Russia.

  • There is growing pressure in Europe to reduce LNG imports from Russia, while the future of US sanctions is currently cloudy. The mild winter in Asia is helping it to access LNG from other exporters.
  • US natural gas prices fell sharply on Friday driven by forecasts for warmer weather around month end. They fell 8% to $3.92 to be down 1.8% last week but still almost 8% higher on the month, which drove some profit taking. CFTC net longs rose 158.3% last week.
  • Lower-48 US gas output increased 8.6% y/y as of Friday, while demand fell 23.1% y/y.
  • President-elect Trump has said that he will remove the pause on licences for new LNG export facilities imposed by Biden and the ban on new drilling around much of the US coast, but this will require a vote in Congress. The start of his term is expected to drive volatility in energy markets.
  • China’s December LNG import volumes fell 13.9% y/y.