Markets have retreated this week with UK Winter-24 gas trading below £1/therm, a level not seen for over a month despite being in the thick of Norwegian maintenance. The market is gaining more confidence for the upcoming season with storage levels over 92% full and imports of liquefied natural gas cargoes picking up. Demand has also remained relatively muted aiding the region whilst supplies have been tight. Send-outs from European LNG terminals are expected to be 23% higher in September compared to August, according to ICIS’s Gas Foresight outlook. Industrial, residential, and commercial demand for gas is also expected to rise compared with the previous month because of the end of the summer holiday season. But even so, consumption remains about 19% below average levels in 2017 to 2021. In addition, delays or disruptions linked to maintenance works in Norway would likely have a relatively small impact on prices, according to ICIS. Elsewhere it appears geopolitical risk premiums are easing with tensions in the Middle East and on the Ukraine-Russia border stabilising for now. This week’s drop has been very much welcomed however its important to note the market remains fragile and therefore energy buyers should not become complacent.
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