Summary

Spot LNG prices in Asia Pacific have risen, and further gains could be seen. European hub prices have come under pressure in August and a supply glut is hitting markets in North America.

Forecast highlights

  • Northeast Asian spot LNG prices are around $7-7.5/MMBtu, having recovered from their July lows and are expected to rise further before winter. GGA estimates regional spot LNG prices will reach over $8/MMBtu in Q4.
  • Although oil-indexed LNG prices in the Asia Pacific region have stabilised slightly, they will decline further over the coming months as recent dips in the oil price filter through. 
  • The NBP day-ahead is around 40-42 p/th, down from a July average of 43 p/th. Rises in European hub prices are expected going into winter. 
  • European contract prices for Russian gas will continue to fall over the next few months. Average prices at the German border fell by 9% year on year in May.
  • Strong gas production in the United States and the country’s improving storage levels are expected to keep the Henry Hub front-month futures price below $3/MMBtu during the rest of the injection season.
  • The price difference between Canada’s Dawn and AECO hubs will remain narrow over the next few months, helped by healthy gas stocks in the country.
  • Spot gas prices in Latin America are expected to remain below $10/MMBtu over the next few months as a result of weakening LNG demand from key consumers such as Brazil and Mexico. The start of the shoulder months in September will also keep prices under pressure.
  • The weak Chinese economy and strong dollar index will keep up the pressure on oil prices. The prospect of increased supplies from Iran as a result of the recent nuclear deal will also weigh on prices.