Planned maintenance in Norway, Europe’s top gas supplier, could increase gas and LNG prices this summer.
Geopolitical tensions in the Middle East and Ukraine raise concerns about gas supply disruptions, further impacting prices.
New LNG export projects coming online from 2025 are expected to stabilize prices in the medium to long term.
Norwegian maintenance and concerns about supply due to the conflicts in the Middle East and Ukraine will support near-term natural gas and LNG prices, RBC Capital Markets said in a note on Thursday.
All these factors move “the risk barometer a notch higher” this summer, the bank said.
Maintenance and unplanned outages in Norway, Europe’s single largest natural gas supplier, are the price drivers to watch this summer, according to RBC Capital Markets.
A new wave of planned maintenance is coming in September and could put upward pressure on European prices, as well as global LNG prices, as competition for cargoes of the super-chilled fuel could rise, RBC analysts noted.
Early this summer, unplanned outages sparked several rallies in Europe’s benchmark gas prices.
The Sleipner hub outage in June sent the Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, surging by 10% on a single day on June 3, to the highest level in six months.
The unplanned outages highlighted the vulnerability of Europe relying on natural gas imports as Norway became Europe’s top gas supplier after the Russian invasion of Ukraine and the slump in Russian gas exports to the EU.
More recently, the price hit last week its highest level this year amid concerns about a possible halt to Russian pipeline supplies via Ukraine.
At the end of last week, natural gas flows from Russia to Europe via Ukraine continued despite clashes at the Russia-Ukraine border near the only gas metering station that still sends Russian gas west to Europe.
Even as the Ukraine-Russia tension escalated with the Ukrainian incursion into Russia’s Kursk region, both sides have signaled they have no intention of interrupting the pipeline gas supply to Europe via Ukraine.
While near-term gas and LNG prices will likely be supported by concerns about supply, the medium to long term could see more stable prices as a wave of new LNG export projects will hit the market, RBC said.
From 2025 onwards, a tidal wave of LNG will drive normalization, the bank noted.
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