In the US, gas prices on the Henry Hub hit a 13 year high this week. In Europe, gas flows from Russia to Europe increased by about 20% in March compared to February.  

Here is Rystad Energy’s regular gas and LNG note from senior analyst Vinicius Romano:

European gas prices fell slightly to just above €100/MWh ($32/MMbtu), as above-average temperatures and steady gas flows temper demand.

In the US, the Henry Hub is at a 13 year high, topping $6.7/MMBtu this morning, as large swathes of the northern US and Southern Canada experience a prolonged winter.

The elevated domestic and export demand from Europe has brought US storages to a lower-than-average level at this time of the year sustaining such prices.

While Europe has banned the import of Russian coal, and a handful of countries have banned Russian oil, gas flows from Russia to Europe increased by almost 20% in March compared to February.

This suggests it may be some time before gas exports are targeted, which may create a temporary sense of confidence in the market.

However, with the rubles payment deadline looming and the anticipated escalation of the situation in Ukraine, any relief for gas markets may be temporary.

The US and Japan have recently announced new sanctions on Russian exports, a move that European countries may follow in the coming weeks.

The EU yesterday requested OPEC increase oil supply to reduce and stop their reliance on Russian oil imports.

Tensions in the group are likely as OPEC members have an interest in increasing production due to elevated prices.

At the same time, other OPEC+ members are the key suppliers to replace Russian oil volumes.

Higher than average temperatures are expected for the week in Europe and an expected increase in German and French winds are forecasted to bring power prices down.

Russian flows have been reduced and LNG imports strengthened in the last few days, as a result of the TTF day-ahead price falling, making spot volume prices more competitive compared to TTF-indexed Russian pipeline gas.

Chinese gas markets continue to be impacted by the government’s zero-tolerance Covid-19 strategy and strict lockdowns, even with Shanghai lifting some restrictions, both gas and oil demand is expected to be negatively affecting.

The Japanese government has requested companies fill up LNG storage preparation for an eventual supply disruption from Russia.

Shell restarted operations from Prelude FLNG, which had been offline since December 3, 2021, which should provide some relief to term off-takers in South Korea and Japan.

Spot buying interest from South Asia has been very robust over the past few days with several cargos being awarded around the $30-dollar mark.