Summary

As the northern hemisphere winter approaches, increases in spot LNG prices in Asia Pacific are expected to be limited in Q4. While Europe's storage situation is strong – the same is not true for Ukraine. In North America, a bearish market looks likely to continue over the coming months.

Forecast highlights

  • Spot LNG prices in Asia Pacific are above $7.6/MMBtu. Although prices are expected to see gains over the coming months, any rises will be limited. A mild start to the winter is likely, which will cap seasonal demand support for prices.
  • The NBP day-ahead is around 41-42 p/th. Heating-related demand will support price rises as Europe prepares for winter. Reduced indigenous production will also tighten the market over the coming months. 
  • Oil-indexed contract prices are low, making Russian gas more attractive to European importers. 
  • Preliminary forecasts for a mild winter in the US are expected to limit gains in the Henry Hub front-month futures price. The Henry Hub is expected to trade below $3/MMBtu during the current gas injection season, but will start to rise when the withdrawal season starts in November.
  • Regional gas prices in the US and Canada are unlikely to see any substantial rise in the coming months as storage levels in both countries are still being built up. Canada’s weakening gas demand will also weigh on regional prices. 
  • Spot LNG prices in Latin America will struggle to rise above $10/MMBtu during the southern hemisphere summer. Ample supplies, together with falling gas demand in Brazil and Mexico, will remain a significant drag on prices.
  • LNG consumers in the Middle East and Africa will continue to benefit from low oil and LNG prices, which will also result in high demand for imported cargoes in the coming months.
  • The North Sea Brent crude front-month futures price is expected to come under additional pressure in the coming months as the global oil supply glut intensifies and Asian demand remains subdued.