BAKU, Azerbaijan, April 12. There is a risk that stronger than expected consumption of electricity due to higher summer temperatures could see a slower build in gas storage in Europe, Trend reports with reference to Fitch Solutions.
The company notes in its latest report that upstream production remains buoyant and rig activity points to continued growth in supply during the coming months keeping fundamentals broadly balanced. Coupled with growing LNG exports and the war in Ukraine, the outlook for prices remains firmly tilted to the upside with high volatility to remain a consistent feature in the medium term.
“Henry Hub front month prices are 95 percent higher (at additional USD3.1mnBTU) than the 5-year high for this time of the year signalling tightness in the market has increased since the start of the year. Despite a mild winter in most areas of the continental US, strong demand for natural gas exports, in particular LNG, have created a ready outlet for US producers,” reads the report.
Fitch Solutions’ analysts point out that expectations for a continued natural gas shortage in key markets in both Asia and Europe, as a result of the Russia Ukraine war, have boosted US natural gas exports and prices.
“We expect the price competition for LNG between Europe and Asia to persist, adding further price upside potential to the US natural gas benchmark. Growing investment appears to be making headway with rig activity in the US continuing its steady growth, which will translate to new gas production in the coming months, keeping markets well supplied and additions to gas storage in line with past seasonal replenishments,” the report says.
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