Gas prices dropped by close to 70% since mid-December across all key gas markets amidst easing supply-demand fundamentals and high storage levels.
In Europe, TTF settled below the €40/MWh mark yesterday, for the first time since August 2022, despite the heavy outages in Norway, strikes in the UK and below-average temperatures in northwest Europe.
The strong LNG inflow and very high storage levels continue to put downward pressure on prices.
Meanwhile in Asia spot LNG prices are heading towards the lower end of the oil-index range, which could incentivise higher buying interest on the spot market, including from Chinese players.
In the US, Henry Hub prices are trading not too far away from $2/mmbtu, compared to almost $7/mmbtu in mid-December. strong growth in production (up by 7% in Q1) combined with an unseasonably mild weather in Jan-Feb eased substantially North American fundamentals.
High storage levels in all markets are set to weigh on summer fundamentals, amidst lower injection needs.
This should give us cautious optimism ahead of the coming months, although
it is too soon to set back and relax: adverse weather, unplanned outages and lower Russian piped gas flows could easily renew market tensions…
What is your view? Where is the market heading? Do you see any upside risks? Or its downside only?
Source: Greg Molnar (LinkedIn)
