Natural gas prices softened across all key markets in February amid milder weather conditions and strong LNG supply growth. Something is telling me that March might be a different story…
In Europe, TTF month-ahead prices fell more than 25% yoy to an average of just above $11/mmbtu. Softer temperatures together with record high LNG imports (up by 18% yoy) put downward pressure on gas prices despite the dwindling storage levels (now below 30% of working capacity).
In Asia, JKM followed a similar trajectory, with prices down by 25% yoy to an average of $10.8/mmbtu. Healthy LNG supply together with weaker demand in China (LNG imports down by 10% yoy) weighed on Asian spot LNG prices. China’s national average price index traded just below JKM, reducing the incentive for spot LNG procurements.
In the US, Henry Hub prices fell by 15% yoy to an average of $3.6/mmbtu as production recovered from the late Jan freeze-offs, while milder temperatures depressed heating demand from the rescom sector. In the Permian, Waha prices spent most of their time in negative territory, waiting for more takeaway capacity.
In Canada, strong production together with high storage levels and moderate demand pushed down AECO prices to an average of $1.3/mmbtu -their lowest Feb levels since 1998.
That was one year before the release of the Slim Shady LP by Eminem.
What is your view? How will gas prices evolve through the spring season? Are we back to extreme price volatility?
Source: Greg MOLNAR
