There appears to be no let-up in the European or UK gas markets. Despite ending a five-day rally earlier this week, prices have once again resumed on their bullish path. Prices eased as China hit back at US tariffs with its own levies, including LNG, possibly leaving more fuel available for European buyers. LNG shipments to NW Europe have increased in recent months due to the colder weather and strong storage withdrawals. This has already caused prices to increase to 15-month highs, with summer prices disincentivizing storage buyers and fuelling fears that restocking may be a challenge ahead. However, we have seen a small shift in the market. The summer-winter25 spread, despite price increases, have seen a contraction in the backwardation. It’s too early to say if this will continue and the status quo still suggests aggressive storage filling in the second half of summer, which also coincides with the heaviest Norwegian scheduled maintenance period this year. Nevertheless, could this be the beginning of a change in direction? Still, lots of risks out there especially with colder weather on the way so expect a bumpy ride.
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