Global LNG prices may rise on improving demand, Europe inventory rebuild: Report
New Delhi, June 9
Global liquefied natural gas prices are expected to climb to their highest levels in more than three years, driven by rising demand in Asia and the need for Europe to replenish depleted inventories ahead of winter, according to a report.
A report by Morgan Stanley forecasted the Asian LNG benchmark price to rise to $25 per million British thermal units (mmBtu) during the third and fourth quarters of the year, an increase of more than 30 per cent from current forward market levels.
If realised, the price would be the highest since early 2023, when European countries aggressively sourced LNG to compensate for reduced pipeline gas supplies from Russia.
The global brokerage said LNG prices are likely to remain elevated even if tensions in the Middle East ease in the near term.
The ongoing disruption around the Strait of Hormuz has significantly impacted global LNG flows, as the route is critical for exports from major producers such as Qatar and the United Arab Emirates, it added.
The report further noted that natural gas consumption has begun recovering in key Asian markets, including India and China, while Europe faces growing pressure to rebuild inventories before the onset of winter.
According to the brokerage's analysts, weaker global LNG imports during March and April had helped offset supply disruptions.
However, demand has started to rebound with the arrival of summer and increasing urgency among countries to strengthen storage levels.
Despite supply challenges in the Persian Gulf region, global LNG availability has been supported by higher production from facilities in other regions and the addition of new export capacity in North America.
As a result, global LNG supply in May was only around one million tonnes lower than the level recorded during the same month last year, according to the report.
Moreover, Morgan Stanley pointed to weather forecasts indicating above-normal temperatures across parts of Asia in June and July, a factor expected to further support LNG consumption for cooling demand.
In Europe, gas demand weakened last month, but inventories remain significantly below historical levels.
While storage levels are estimated to be 17 per cent lower than a year ago and roughly 25 per cent below the 10-year average, underscoring the need for additional purchases in the months ahead.
— IANS
Reader Comments
Interesting report from Morgan Stanley. As someone in the energy sector, I see the price jump as inevitable given the Asia-Europe competition for gas. However, I worry about the impact on developing nations like India where every rupee counts for households. Hope the government has a buffer plan through strategic reserves.
Why does it always feel like India gets caught in the middle of global energy politics? First, Russia-Ukraine war, now Middle East tensions. We need to seriously ramp up domestic gas production and maybe even look at small modular nuclear reactors for baseload power. Rising LNG prices just mean more inflation for common people.
The report's point about Europe's storage being 25% below average is crucial. They'll scramble for LNG this summer, driving prices up. India should capitalize on its growing renewable capacity—solar is cheap and abundant here. But let's be realistic: gas will remain a transition fuel for at least a decade. Need smart hedging.
The Strait of Hormuz disruption is a serious risk for India since we import 40% of our LNG from Qatar and UAE. Diversifying suppliers should be urgent. Canada's new LNG exports from 2025 could help, but until then, higher prices are likely. I just hope our government doesn't pass on the full cost to consumers. It's already tough out there.
A 30% price hike sounds alarming, but I appreciate the analyst noting that production from North America and record heat in Asia will balance things. Still, for countries like India where gas is used for cooking (PNG) and power, this could mean higher bills. Time
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