LNG: Supply Developments Remain In Focus As Summer Approaches

Natural gas prices were lower yesterday driven by profit taking and weaker risk appetite. Europe was down 1.2% to EUR 36.56 but is still up 13.1% this month, but markets continue to be nervous about any supply disruptions given the shift away from Russian fossil fuels and increased sanctions on its tanker fleet going to China. 

• Europe has increasingly become reliant on LNG imports from the US since Russia’s invasion of Ukraine and so news of the third tank at the US’ Freeport LNG facility returning to service after three years off line was welcome. Europe is also more reliant on Norway, which is currently engaged in seasonal maintenance reducing 50% of production.
• A hot summer in Asia is a risk to Europe’s refilling schedule as the two regions compete for global supplies. Current low oil prices though may see Asian purchasers switch away from gas. Last year India increased its usage substantially to meet cooling demand.
• US gas fell 2% to $3.36 on Wednesday after jumping 9.9% on Tuesday as lower prices attracted buyers ahead of increased heating demand. It reached a month low of $3.10 on Monday. Prices are now up almost a percent this month.
• Weather forecasts suggest higher temperatures for much of the US at the end of May and start of June, according to Atmospheric G2.
• US gas stocks are forecast to have risen 119 bcf last week, according to analysts surveyed by Bloomberg, compared to the 5-year average for that time of +87 bcf. The data is out later today.