Blurb
Global LNG prices may surge as Asian demand strengthens and Europe accelerates inventory rebuilding ahead of winter.
New Delhi
Ope’s efforts to replenish depleted gas inventories before winter, according to a report released on Tuesday.
A report by Morgan Stanley projected the Asian LNG benchmark price to reach $25 per million British thermal units (MMBtu) during the third and fourth quarters of the year. This would represent an increase of more than 30 per cent from current forward market levels and mark the highest price since early 2023.
The brokerage noted that LNG prices are likely to remain elevated even if geopolitical tensions in the Middle East ease in the coming months. Disruptions around the Strait of Hormuz, a crucial route for LNG exports from major producers such as Qatar and the United Arab Emirates, have continued to influence global energy markets.
According to the report, natural gas demand has begun recovering in key Asian economies, including India and China. At the same time, Europe faces increasing pressure to rebuild gas inventories after storage levels fell significantly below historical averages.
Analysts observed that weaker LNG imports during March and April helped offset some supply disruptions. However, demand has started rebounding with the onset of summer and growing requirements for energy storage.
Despite challenges in the Persian Gulf region, global LNG supply has remained relatively resilient. Increased output from facilities in other regions and additional export capacity in North America have helped support market availability. As a result, global LNG supply in May was only around one million tonnes lower than the corresponding period last year.
The report also highlighted forecasts of above-normal temperatures across parts of Asia during June and July, which are expected to boost LNG consumption for cooling purposes.
In Europe, gas demand softened last month, but storage inventories remain about 17 per cent below year-ago levels and nearly 25 per cent lower than the 10-year average, underscoring the need for additional LNG purchases in the coming months.
