Analysts: Global LNG oversupply will put pressure on gas prices

With gas storage levels in Europe at record highs and consumption still relatively low—not only in Europe—some analysts believe pressure on gas prices could intensify in the coming weeks, especially if there are no unplanned outages. However, a recovery in demand and another round of outages across Norway’s gas infrastructure could prevent a further sharp drop in prices.

Imports of liquefied natural gas (LNG) into Europe have recently fallen, with imports in July dropping to their lowest level in 11 months, according to data from Kpler. The decline in LNG imports to Europe is apparently due to lower demand given the high levels of underground gas storage, alongside steady pipeline gas supplies, which have recently been constrained mainly by maintenance in Norway and repeated extensions of some outages.

According to analysts contacted by Montel, LNG imports also fell year on year in Asia in July, and were even 8% lower than in July 2021. In addition to recovering demand in China, which has fallen short of expectations in recent months, demand for LNG in Asia is also being reduced by the greater number of nuclear units in Japan that have returned to operation in recent years.