LNG: Weather Forecasts Drive Prices As Heating Season Approaches Its End

European gas prices rose 5.6% to EUR 43.55, close to the intraday high. They are now down only 1.8% this month. A step up in military action between Russia and Ukraine and forecasts for colder weather drove prices higher. The market had closed when it was announced that Ukraine agreed to the US’ 30-day ceasefire proposal. Talks will now begin with Russia and a successful deal could see an easing of sanctions on its fossil fuel exports. 

• Northwest Europe is expected to experience lower-than-average temperatures this week coinciding with lower wind generation. Storage is already at three-year lows and this combination is likely to pressure them further. The heating season finishes at the end of March and concerns persist around refilling ahead of next winter.
• US natural gas fell 3.3% to $4.34 on Tuesday to be up 13.3% in March. The decline was driven by profit taking given forecasts for milder weather in the north and western US for mid-month, while the south is likely to see lower temperatures, according to Atmospheric G2.
• Japan’s largest purchaser of LNG JERA said that after its contracts with Australia expire from 2030, it will look to other countries for its supplies unless there is a change in government policy towards project approvals, industrial relations and emissions measures which improve competitiveness, according to The Australian.
• This will coincide with new supplies becoming available in the US. JERA’s LNG SVP said that “in contrast to Australia, in the US there are expectations of abundant future new supply, cheaper prices, lower cost of production and labour, and faster project approvals for LNG projects”.