Weekly Market View – w/c 12th June, 2023
Weekly Market View – w/c 5th June, 2023
Market Drivers May 2023
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– North West Europe storages are forecast to end June at 408TWh – well above last year, and the five-year average. This is only 37TWh shy of the record high observed in 2020.
– European storages likely to be full before the end of the injection season. This should ensure the bearish pressure remains in play.
– Demand destruction in industrial and gas for power sectors to continue to stay strong.
– Warmer than normal weather forecast for June should see a strong month on month reduction in domestic consumption both in the UK and Europe.
– UK Rough storage maintenance will cut 5mcm/d of injection demand during 7-28 June, loosening the UK market.
– Heavy Norwegian maintenance will continue in June with several large fields shutdown in the first half of the month.
– Potential for higher gas for power generation supported by the outlook for below-normal wind power generation in June.
– Expectation for lower total LNG sendout in June on the back of stronger cooling demand in Asia.
– Maintenance at LNG terminal at Montoir, with no ship at berth and regasification capacity cut during 3-11 June
May was overall a bearish month with prices in Europe continuing to be pressured downwards. Storage levels remained above the five year average. Even the recent spate of maintenance in Norway in which production has been significantly cut has failed to provide any support to prices with contracts across the curve falling back around or below Q3-21 levels as demand stutters. Total EU storage stocks are now at 65% compared to 42% in May 2022.
Looking ahead to June and the rest of the summer, the bearish fundamentals are expected to remain in place. The heavy Norwegian production cuts will continue in June with several large fields shut down in the first half of the month and Troll capacity reduced. The weather outlook indicates well above normal temperatures in June in both the UK and Europe.