Rystad examines gas prices in Europe and the USA

An update from Rystad Energy's gas and LNG market analyst Christoph Halser, sent to Rigzone by the Rystad team late Thursday, highlighted that European gas prices had risen to their highest levels this year “as damage to the only entry point of Ukrainian gas transit was revealed.”

“Gas markets were alerted to damage at the Sudzha gas metering station on August 12, with satellite imagery indicating damage to at least one of the station's four compressor units,” the update said.

“This pushed European gas prices to their highest levels since December 1, 2023, before Gazprom denied the station's destruction late Monday afternoon,” it said.

“Title Transfer Facility (TTF) monthly futures reached a high of $13.65 per million British Thermal Units (MMBtu) during trading on Monday, up 5.5 percent from Friday's close,” it said.

The update also said that the planned but simultaneous maintenance of the upstream section of the Trans-Adriatic Pipeline may have further contributed to the rapid price development.

Physical flow across Sudzha recovered to 42.98 million cubic metres per day (MMcmpd) on Monday, the update said, stressing that this was a 12.9 percent increase from Friday's low of 39.77 MMcmpd.

“Speculation about halted deliveries rather than actual delivery announcements continues to dominate European gas price developments this week,” the update said.

“Next month's futures closed at $13.04 per MMBtu on Monday, just 0.9 percent higher than Friday. Week-on-week, TTF gas futures prices rose 1.8 percent to $12.63 per MMBtu through Wednesday,” it said.

Henry Hub rebound

The Rystad update highlighted that North American Henry Hub prices recovered this week, “reaching $2.148 per MMBtu on August 14, driven by expected increasing cooling demand through the end of the month.”

Above-average temperatures are forecast for all regions of the United States by the end of the month, the update said.

“In the south-central and mountainous regions, temperatures are expected to rise above the 1979-2000 average by mid-month,” it said.

“Meanwhile, higher temperatures are forecast for the Pacific and Midwest by the end of the month. The US National Oceanic and Atmospheric Administration (NOAA) expects temperatures of over 28 degrees Celsius across the Pacific region on August 29, compared to a long-term average of 19 degrees Celsius,” it said.

“Similarly, temperatures in the Midwest will rise to 29 degrees Celsius, above the long-term average of 21 degrees Celsius, while the southern United States is expected to see temperatures of 34 degrees Celsius on August 29,” it said.

The forecast high temperatures are likely to lead to an increased need for cooling and thus drive up the demand for natural gas from gas-fired power generation, the update says.

The update also noted that an above-average hurricane season “could increase the risk of outages at liquefaction plants and result in reduced raw gas supplies, which would negatively impact Henry Hub prices due to oversupply.”

Looking at supply, Rystad's update noted that “rig count decreased by three to 98 in the week ended July 30.”

“US dry gas production in the Lower 48 fell 0.3 percent last week to a daily average of 103.2 billion cubic feet per day,” it added.

“Meanwhile, 21 billion cubic feet of gas were added to underground storage facilities last week, bringing total reserves to 3.27 trillion cubic feet,” it said.

“Although the pace of storage expansion has slowed slightly in recent weeks, it is 14.8 percent above the five-year average and 8.2 percent above the previous year's figures,” it continues.

Fear of supply interruptions

A previous Rystad update on Halser's gas and LNG market sent to Rigzone on August 9 said that “recession fears have gripped financial markets,” but added that gas markets “have priced in fears of supply disruptions in the Middle East amid a threat of retaliation from Lebanon-based militant group Hezbollah and Iran following the assassination of Hamas leader Ismail Haniyeh in Tehran.”

“In addition to a possible decline in Israeli gas production from the Tamar field and halted deliveries to Egypt via the Eastern Mediterranean (EMG) subsea gas pipeline, Ukrainian forces confirmed the seizure of the Sudzha gas metering station in Russia on August 7,” the update said, adding that the station was “notably the entry point for Russian natural gas into the EU.”

“Global gas markets have seen broad-based price increases in response to potential supply risks,” the update said.

To contact the author, send an email [email protected]