Lng Supply Keeps Gas Prices Low

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Lng Supply Keeps Gas Prices Low

Lng Supply Keeps Gas Prices Low - Commerzbank

report from Commerzbank reveals that gas prices in Europe are at historic lows. To give you some perspective, the prices are lower by almost 25% when compared with last year.

The key reason for lower prices is improved supply and lower demand across the globe. Another factor to consider is that the storage levels in Europe remain low when compared with the five-year average. This is mainly because of the improved availability of LNG.

Chinese Demand Remains Weak

Also, Europe has made a lot of progress and expanded its import terminals. At the same time, the supply has also improved, which means the gas prices are not likely to move higher anytime soon.

If we look at the USA, they have increased the supply of gas. However, the LNG demand from China remains weak, which has created an interesting situation in the market.

It's worth noting that China is one of the largest importers of LNG. So, a decline in the demand automatically improves the supply and keeps the prices under pressure.

According to Commerzbank, the overall demand for LNG is lingering at a multi-month low. The official number is 9.78 million tons, which is lower than the average from earlier years.

To sum it up, the LNG imports are shrinking in Europe, China, and several other countries. At the same time, the pipeline capacity is also improved, which also affects the LNG market.

On average, the imports are down by around 17% from last year, which is quite a lot. Commerzbank believes that the mild temperature during the start of winter was also a key factor behind lower prices.

Looking ahead, the chances of any reversal in this trend are very low. In fact, improved supply and weaker demand will put further pressure on the LNG prices. So, we can expect a revisit to historic low prices of LNG in the next few quarters.

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