Commerzbank’s Norman Liebke stresses that European natural gas remains structurally tighter than Oil as Qatar LNG is cut off and US cargoes are redirected to Asia. He points to historically low storage levels, EU bans on Russian LNG and pipeline gas, and El Niño-driven Asian demand as factors that could prolong the divergence between Oil and natural gas prices.
European market strain and storage
“The situation on the European gas market is currently more strained than that on the oil market. This is indicated by recent price trends. Since the price decline in June, which was triggered by the framework agreement between the US and Iran, oil and gas prices have decoupled.”
“US LNG exports destined for Europe, however, have increasingly been rerouted to Asia for several months now. This is particularly problematic during the gas storage replenishment phase, as evidenced by the historically low gas storage levels. These levels are a good 17 percentage points below the five-year average and, under current circumstances, are likely to barely reach 70% by the start of the heating season.”
“The European Commission is increasingly relying on LNG imports during the winter, but this entails corresponding price risks, especially since the El Niño weather phenomenon is expected to drive up gas demand in Asia over the coming weeks and months. In addition, the EU decided earlier this year to ban Russian LNG imports starting early next year and pipeline gas imports from Russia starting in the fall of 2027. The divergence between oil and gas prices could therefore continue in the coming period.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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