The International Energy Agency said in a report on Tuesday Europe’s liquefied natural gas demand is expected to increase by more than 15% in 2025 after a drop a year ago, and the global gas market balance remains fragile.
(Jan 21): European natural gas prices moved higher, with traders assessing the prospect of another year of tight supplies against US plans to boost exports.
Benchmark futures rose after fluctuating earlier, adding as much as 1.6% in early trade. Europe’s liquefied natural gas (LNG) demand is expected to increase by more than 15% in 2025 after a drop a year ago, and the global gas market balance remains fragile, the International Energy Agency said in a report on Tuesday.
That means higher prices for longer to attract more cargoes. However, US President Donald Trump ended a moratorium on new US export licences, easing some concerns about longer-term supply.
Still, any impact on the market is likely to come later this decade when new projects come online and this year could still be challenging for Europe as it needs more LNG to cover demand, especially after losing Russian pipeline gas flows crossing Ukraine.
Trump also reiterated a call for the European Union to buy more American oil and gas to avoid tariffs. The US is already Europe’s biggest LNG supplier.
“Ultimately participants are still taking a risk-off approach, given storage withdrawals coupled with the fact that we’ve still got almost two months of peak winter,” said Nick Campbell, a managing director at Inspired plc. Prices are also likely supported by cold weather in the US, which seems to be impacting some export facilities, analysts at Engie SA’s EnergyScan said in a note.
Overall LNG imports already rose in Spain, Turkey and Poland so far this month, while flows into Northwest Europe and Italy are still below last year’s levels, according to BloombergNEF.
Europe has managed to diversify its supplies since the energy crisis three years ago, but this heating season has served as a reminder of its vulnerability. Cold weather — after two relatively mild winters — has led to faster-than-normal depletion of gas inventories and prices remain elevated, prolonging pain for consumers.
Over the next four years to 2028, a 40% growth in global LNG supply should see Europe resolve much of its problems left from the crisis, “with gas prices likely to halve,” Citigroup Inc. said in a note.
Dutch front-month futures, Europe’s gas benchmark, traded 1.5% higher at €48.55 (RM225.78) a megawatt-hour by 10.09am in Amsterdam.
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