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LNG: Winter Weather Forecasts Driving Gas Prices

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European gas rose 1.25% on Tuesday to EUR 48.22 off the intraday high of EUR 48.83. It is still down 2.5% this week and almost 1% this month. Supply disruptions and cold weather supported prices. Temperatures are forecast by Maxar to fall towards average at the start of February at a time of reduced capacity in Norway and lower expected wind-generated power. Inventory drawdowns have been at a faster pace this winter than last.  

  • Morgan Stanley estimates that Europe will have to increase LNG imports by 35% y/y over April-September, a time of increased cooling demand in Asia, to achieve its refilling targets. It has begun talks with the US to increase imports from there to avoid tariffs on European shipments to the US.
  • There have been discussions to allow gas from Azerbaijan to flow through Ukraine to Europe but they remain vague and Bloomberg believes the impact on supplies would be minimal. The EC says that talks with Ukraine are ongoing.
  • US natural gas fell sharply on Tuesday driven by forecasts of higher-than-average temperatures for the eastern US. The February contract, which expires today, fell 8.9% to $3.37 to be almost 18% lower this week and down 8.6% in January. 
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European gas rose 1.25% on Tuesday to EUR 48.22 off the intraday high of EUR 48.83. It is still down 2.5% this week and almost 1% this month. Supply disruptions and cold weather supported prices. Temperatures are forecast by Maxar to fall towards average at the start of February at a time of reduced capacity in Norway and lower expected wind-generated power. Inventory drawdowns have been at a faster pace this winter than last.  

  • Morgan Stanley estimates that Europe will have to increase LNG imports by 35% y/y over April-September, a time of increased cooling demand in Asia, to achieve its refilling targets. It has begun talks with the US to increase imports from there to avoid tariffs on European shipments to the US.
  • There have been discussions to allow gas from Azerbaijan to flow through Ukraine to Europe but they remain vague and Bloomberg believes the impact on supplies would be minimal. The EC says that talks with Ukraine are ongoing.
  • US natural gas fell sharply on Tuesday driven by forecasts of higher-than-average temperatures for the eastern US. The February contract, which expires today, fell 8.9% to $3.37 to be almost 18% lower this week and down 8.6% in January.