Low storage levels, declining LNG inflows and the impact of hot weather are keeping the market sensitive to risk.

Current market situation

The annual price 27 was quoted at 34.85 EUR/MWh yesterday evening, marking a decline. The trading range between 34.79 and 35.47 EUR/MWh indicates that the market remains highly reactive.

Fundamentally, the situation remains tight. Europe’s LNG deliveries, including those to Turkey, fell by 14% to 2.3 billion cubic metres last week and are expected to decline by a further 5% to 2.2 billion cubic metres this week. Imports are thus 13% below last year’s level. At the same time, Asian LNG import figures have remained consistently high throughout the month and are a key factor in why Europe is struggling to attract additional volumes to build up storage. The monthly increase in Asia is broadly based, led by China and India; in both cases, however, imports remain below contractual levels.

European storage levels remain well below seasonal averages at around 46 per cent. Higher Norwegian flows are having a stabilising effect, whilst Ras Laffan, Qatar and the Strait of Hormuz continue to create uncertainty. The return of empty Qatari LNG tankers is a positive sign, but does not yet signal a return to normality.

Short-term outlook

In the short term, the market remains well supported and volatile. Key factors include LNG availability, Asian demand, storage build-up and the situation in the Strait of Hormuz. The heatwave may provide further support for demand, whilst isolated signs of easing tensions are capping the risk premium.