LNG prices have room to rise by about a third from the current very high levels amid low European gas inventories and fierce competition for spot supply between Europe and Asia, analysts and industry executives say.
Europe is heading into winter with one of the lowest levels of gas in storage in the past two decades as the war in the Middle East crippled LNG supply from Qatar, sent gas and LNG prices in Europe and Asia skyrocketing, and intensified competition for readily available global LNG cargoes that don't need to cross geopolitically charged chokepoints.
Spot LNG prices in Northeast Asia have jumped by $2.70 from last week to $28.40 per million British thermal units (MMBtu) this week, as Energy Intelligence has assessed prices for LNG deliveries one to two months ahead.
With LNG supply from Qatar and the United Arab Emirates (UAE) still mostly trapped in the Persian Gulf, the global market has tightened and sent prices in both Asia and Europe in recent days to the highest levels since the end of 2022.
Concerns about Europe's refill rates, lagging behind historical norms and at a record low for this time of the year, and the intensified Europe-Asia competition for non-Middle Eastern LNG supply have been pushing prices higher as winter approaches.
“Right now, where we stand in Europe is at a historically low storage level heading into the end of fall,” Cederic Cremers, president of Integrated Gas at Shell, the world's top LNG trader, said at the Gastech conference in Bangkok this week, as carried by Reuters.
Gas storage sites across Europe are less than 70% full at present, compared to 82% for this time of year in 2025 and a five-year average of above 80%.
A cold winter would be the real stress test for the market as flows through Hormuz are not expected to pick up materially by the end of the year.
In a colder-than-usual winter, LNG prices could jump from nearly $30 per MMBtu now to $40 per MMBtu, which would be equivalent to about $240 per barrel Brent and bring demand destruction, Simon Flowers, chairman of energy consultancy Wood Mackenzie, said at the Gastech event.
By Tsvetana Paraskova for Oilprice.com
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