Hsbc Forecasts Weak Natural Gas Prices

Hsbc Forecasts Weak Natural Gas Prices by Andrew Blumer last updated on July 05, 2024

Hsbc Forecasts $9 Price Level For Natural Gas

The analysts at HSBC have recently shared their outlook for natural gas with a focus on the EU gas market. According to them, the gas market in the European region is now very close to reaching an equilibrium.

If we look at the Natural gas price in the last few days, it looks to be trading positively, as the TTF benchmark has already crossed the $10 level.

Eu Gas Stocks Remain Above Average

However, HSBC added that supply disruptions at various spots have led to an increase in the prices of natural gas. But despite the setbacks, the inventories of natural gas in Europe are still well stocked, near 64% against average levels of 43%.

Additionally, the demand for natural gas is low as the power generation from non-gas facilities is still very robust. That's why HSBC added that the natural gas faces a minor downside risk in the coming weeks or months.

During the summer of 2024, the average price of natural gas will be near $9/Btu. The HSBC analysts have set this forecast after looking at the dynamics of the market.

The bank analysts added that the EU gas market is very close to establishing a new normal. Especially after the Russian-Ukraine tension, it is a big step for the EU markets.

Despite all of this, the winters of the 2024 and 2025 will prove to be challenging for the EU region as the new LNG supplies will only enter the system from 2025 - 2028.

The inflow of LNG supplies is expected to lead to an oversupply situation in the EU market starting in 2026. In fact, the same situation will last till the end of the decade, which means weak natural gas prices going forward.

The long-term outlook for the natural gas is geared towards downside as the LNG shipments will fill the gap in the EU markets.