European and UK wholesale gas prices have increased over the last couple of sessions, with prices trading at a week high. Concerns around LNG diversions from Europe to Asia, cooler temperatures, lower wind generation and unplanned outages in Norway have been cited as the reasons for the increase. With temperatures improving in the coming days and European prices once again above Asian LNG prices, there appears to be a tug-of-war between ample LNG supply and structural tightness heading into summer maintenance season.
In other news the EU has just voted in favour of relaxing storage targets from 90% to 83% by the 1st of December, which shouldn’t have come as a surprise to anyone. This week the European Commission also announced they would propose legal measures to phase out Russian Energy by 2027 next month. Whilst details remain scarce, they have stated they would want to ban new Russian gas and LNG deals and European imports under existing spot contracts by the end of 2025. They have also stated they would like to ban imports under existing long-term contracts by the end of 2027. Both Slovakia and Hungry have rejected the Commission proposals.
For those watching the market closely we would recommend keeping a close eye on upcoming Norwegian outages as well changes to EU energy policy.
