With Robust Asian Demand, Europe Nervous Re Ukraine

European LNG prices were slightly lower on Friday but are still around 10% higher in August to date. They fell 0.4% to EUR 39.43 off the intraday low of EUR 39.12. Prices have been supported by Ukraine’s move into Russia’s Kursk province and the acquisition of gas infrastructure at Sudzha, the last pipeline taking gas from Russia to Europe through Ukraine.

• Ukraine’s incursion into Russia is yet to disrupt gas flows though, but Europe remains alert to possible outages.
• US natural gas fell 3.1% to $2.13 on forecasts for cooler weather in the east and west. Prices are currently around $2.11 and still up 3.3% this month. The market has looked through the first summer inventory drawdown in eight years as output has been cut back and cooling demand has been robust. Production on Friday was up 1.8% y/y while demand rose 4.1% y/y.
• North Asian prices increased 4.8% on Friday to be up over 15% in August as hot weather continues to drive strong cooling demand. India’s LNG imports rose 15% y/y in July. High Asian demand continues to compete with Europe for shipments.