The prediction of a global LNG price increase this winter has been particularly made by managers and analysts at Shell. This forecast is due to the reduction of gas storage in Europe to its lowest level in recent years and the increasing competition among buyers in Northeast Asia, especially under supply disruptions from the Middle East.
Gas Storage Situation in Europe
The natural gas storage of the European Union is currently at 67%, which is significantly lower than last year. The EU's target is to reach 80% storage capacity by December. Managers at Norway's Equinor have predicted that this figure will reach 75% by November 1.
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Factors Affecting Global LNG Prices
Shell Energy also pointed to the disruptions caused by the war between the U.S. and the Israeli regime against Iran, stating that this war has hindered LNG exports from Qatar and the United Arab Emirates, reducing global LNG supply by 36 million tons this year. Cedric Cremers, the head of integrated gas at Shell, emphasized that storage levels are at their lowest and this situation will continue until the end of autumn.
Given the current conditions, cash prices for LNG cargoes in Asia have surged to $30 per million British thermal units (mmBtu) this year, approximately three times higher than the nearly $10 per million units before the war. This price increase could lead to a decrease in demand.
Simon Flowers, head of the consultancy Wood Mackenzie, warned that in the event of a cold winter, prices could reach $40 per million thermal units, equivalent to about $240 per barrel of Brent crude. This situation particularly exacerbates the existing challenges in the market.
In conclusion, industry managers emphasized the need for re-storing natural gas before and after winter, and the current conditions may lead to increased competition between European and Asian buyers.
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