Geopolitical uncertainty and weak fundamentals to keep LNG and gas prices stable for the week

Executive summary

European TTF front-month price outlook:  Steady

Kpler expects the front-month TTF to remain relatively steady in the coming week. After five consecutive days of price increases driven by escalating tensions in the Middle East, we anticipate that geopolitical risks will continue to exert upward pressure on prices as long as the situation remains volatile. However, fundamentals are expected to stay loose enough to counterbalance these risks. The completion of works on Algerian pipelines and additional volumes from Norway—expected as the planned maintenance season nears its end—should help maintain strong underground storage levels.

Asian LNG front-month price outlook: Steady

Asian LNG prices mainly stabilized only increasing by $0.01/MMBtu w/w to $13.09/MMBtu on 2 October. Even with geopolitical tension and attempted attack in the Middle East, Asian prices haven't been impacted as much as spot demand has been weak due to the peak summer cooling season ending along with recovering supply.  LNG prices in Asia are expected to stay stable for the week ahead, driven by continued geopolitical uncertainty as well as potential winter restocking activities and supply outages, mainly from the US balancing weak fundamentals in the region.

US Henry Hub front-month price outlook: Steady

Producers continue to cut supply to buoy the market.  Power demand continues to decline substantially as the heating season approaches. US LNG facilities see decreased utilization, hurricane season remains a major threat to feedgas demand.   Storage balances getting close to the 5-year average.

Daily thermal fuel rolling front-month prices ($/MMBtu)

Source: Kpler calculations based on ICE and NYMEX

Price movement definitions

Steady – front-month prices move in a 20 cents/MMBtu upside/downside range

Bearish – front-month prices decrease by more than 20 cents/MMBtu

Bullish – front-month prices increase by more than 20 cents/MMBtu