Weather In Asia Pushes Gas Prices Higher But US Lower

European LNG prices rose sharply on Monday by 4.2% to EUR 33.87, close to the intraday high of EUR 33.96. They are now down only 1.8% in July after rising Friday as well. Since Russia’s invasion of Ukraine, Europe now competes with Asia for global LNG and increased demand there due to hot weather is boosting European prices as a result. They are also persistently sensitive to supply disruptions.

• Gas markets are nervous about a full war between Israel and Hezbollah. Qatar is one of the largest LNG exporters and its shipments could be disrupted in this eventuality. They are also monitoring the US hurricane season closely.
• Significant Norwegian maintenance is scheduled for the end of August, which will be watched closely for any unplanned extensions. European gas storage levels remain seasonally high giving the region a buffer heading towards the next heating season.
• The September US Henry Hub natural gas contract is little changed at $2.05 but sharply lower in July by 21%. August futures expired yesterday. Excess supply concerns have weighed on US gas prices and in addition weather forecasts are now saying that temperatures are likely to fall in the second week of August in the West to Midwest.
• North Asian prices rose 3% to be up 1.8% on the month as forecasts are for above average temperatures in Japan and South Korea into mid-August signalling a pickup in cooling demand.