Analys
Natural gas – A Glimpse into Supply, Demand, and Prices


Supply: Recent weather patterns across Europe have been milder than usual, leading to a delayed onset of the heating season. The weather forecast for the next two weeks predicts a continuation of this trend. As a result, EU TTF spot prices have decreased, leading to a reduced volume of LNG imports to Europe in September and early October. Current imports stand at about 3.3 TWh/day, down from 4.0 TWh/day at this time last year, and significantly lower than the 6.0 TWh/day at the beginning of summer 2023.

Although peak maintenance on the Norwegian Continental Shelf (NCS) concluded in mid-September, it is scheduled to continue for another month. Despite this, Norwegian natural gas exports to Europe are encouraging, currently at 2.6 TWh/day, though still below the historical average of 3.4 TWh/day. Meanwhile, Russian supplies have increased marginally from 0.6 TWh/day in mid-summer to 0.85 TWh/day currently, yet they remain 2.65 TWh/day below the historical average. Overall, Europe’s current supply is roughly 8.65 TWh/day, clearly lower than the historical average of 11 TWh/day for this period.
Demand: Last year witnessed a significant decrease in European natural gas demand, which has persisted longer than anticipated. Present consumption rates are slightly lower than last year at 7.5 TWh/day and are 2.5 TWh/day below the historical norm. Current consumption patterns resemble those typically seen in August—a month characterized by European holidays and peak maintenance on the continent’s natural gas infrastructure. The prevailing mild weather is likely to further reduce consumption in the coming weeks. Moreover, industrial gas consumption among the EU’s major consumers (DE, FR, IT, BE, UK, & NL) has remained consistent with October 2022 levels, at 1.9 TWh/day, which is 0.6 TWh/day below historical averages.

Inventories: EU natural gas storage levels are nearing capacity, with current levels at 96.3%, 9.5% higher than the five-year average. This excess has contributed to the decline in spot prices. With storage nearly full, some stored volumes must be sold at discounted rates to accommodate incoming LNG shipments. However, longer-term prices for the upcoming months and winter 2023/24 remain relatively stable. Although concerns about potential shortages for the upcoming winter are lessening, end-of-April 2023 inventory levels will influence the market for the following seasons.

Inventory Outlook: Given the ongoing demand reduction, inventories are expected to remain robust in the short term. However, as the end of the year approaches, projections indicate a convergence towards a more ”normal” inventory level. This means that by year-end, inventories will be 36 TWh above typical levels, a significant reduction from the 259 TWh surplus in early April 2023. Presently, the surplus stands at 116.8 TWh. The trend suggests that inventory levels will approach historical norms, resulting in a tighter EU natural gas market as peak winter approaches.

Price Dynamics: Europe’s mild start to the heating season has proven beneficial, especially during a time of peak maintenance at the NCS and potential risks of decreased global LNG supplies (Australian LNG). The high current inventory levels have significantly minimized the risk of natural gas shortages for the upcoming winter. However, as the heating season progresses, the EU inventory drawdown will be significant.

Current price dynamics reveal that the EU TTF forwards (M+1 and winter 2023/24) have declined “too far” compared to the Japanese LNG price. LNG is, and will continue to be, the marginal supplier of natural gas to Europe.
In 2022, the EU witnessed unprecedented levels of LNG imports. To realize this, the EU natural gas price consistently traded at a premium — averaging EUR 15.6/MWh over the front-month Japanese LNG price throughout the year. By the second half of 2022, this premium escalated to an average of EUR 30/MWh. However, the tables have turned: currently, the EU price is at a discount of EUR 8/MWh to the Japanese LNG price for November (M+1) and EUR 5.5/MWh for Q124.
We foresee this trend as short-lived. We believe that, as winter approaches, the EU TTF natural gas price will not only match but potentially exceed the Japanese LNG price by a premium of EUR 5-10/MWh. In our view, the current EU TTF natural gas forwards are undervalued relative to the Japanese LNG price and will likely see a correction, ensuring the EU continues its robust LNG imports. Standing by our early September Gas price projection, we anticipate the average TTF spot price for Q4 2023 to be around EUR 55/MWh and the aggregate for 2023 to settle at EUR 45.5/MWh.
Analys
More from OPEC+ means US shale has to gradually back off further

The OPEC+ subgroup V8 this weekend decided to fully unwind their voluntary cut of 2.2 mb/d. The September quota hike was set at 547 kb/d thereby unwinding the full 2.2 mb/d. This still leaves another layer of voluntary cuts of 1.6 mb/d which is likely to be unwind at some point.

Higher quotas however do not immediately translate to equally higher production. This because Russia and Iraq have ”production debts” of cumulative over-production which they need to pay back by holding production below the agreed quotas. I.e. they cannot (should not) lift production before Jan (Russia) and March (Iraq) next year.
Argus estimates that global oil stocks have increased by 180 mb so far this year but with large skews. Strong build in Asia while Europe and the US still have low inventories. US Gulf stocks are at the lowest level in 35 years. This strong skew is likely due to political sanctions towards Russian and Iranian oil exports and the shadow fleet used to export their oil. These sanctions naturally drive their oil exports to Asia and non-OECD countries. That is where the surplus over the past half year has been going and where inventories have been building. An area which has a much more opaque oil market. Relatively low visibility with respect to oil inventories and thus weaker price signals from inventory dynamics there.
This has helped shield Brent and WTI crude oil price benchmarks to some degree from the running, global surplus over the past half year. Brent crude averaged USD 73/b in December 2024 and at current USD 69.7/b it is not all that much lower today despite an estimated global stock build of 180 mb since the end of last year and a highly anticipated equally large stock build for the rest of the year.
What helps to blur the message from OPEC+ in its current process of unwinding cuts and taking back market share, is that, while lifting quotas, it is at the same time also quite explicit that this is not a one way street. That it may turn around make new cuts if need be.
This is very different from its previous efforts to take back market share from US shale oil producers. In its previous efforts it typically tried to shock US shale oil producers out of the market. But they came back very, very quickly.
When OPEC+ now is taking back market share from US shale oil it is more like it is exerting a continuous, gradually increasing pressure towards US shale oil rather than trying to shock it out of the market which it tried before. OPEC+ is now forcing US shale oil producers to gradually back off. US oil drilling rig count is down from 480 in Q1-25 to now 410 last week and it is typically falling by some 4-5 rigs per week currently. This has happened at an average WTI price of about USD 65/b. This is very different from earlier when US shale oil activity exploded when WTI went north of USD 45/b. This helps to give OPEC+ a lot of confidence.
Global oil inventories are set to rise further in H2-25 and crude oil prices will likely be forced lower though the global skew in terms of where inventories are building is muddying the picture. US shale oil activity will likely decline further in H2-25 as well with rig count down maybe another 100 rigs. Thus making room for more oil from OPEC+.
Analys
Tightening fundamentals – bullish inventories from DOE

The latest weekly report from the US DOE showed a substantial drawdown across key petroleum categories, adding more upside potential to the fundamental picture.

Commercial crude inventories (excl. SPR) fell by 5.8 million barrels, bringing total inventories down to 415.1 million barrels. Now sitting 11% below the five-year seasonal norm and placed in the lowest 2015-2022 range (see picture below).
Product inventories also tightened further last week. Gasoline inventories declined by 2.1 million barrels, with reductions seen in both finished gasoline and blending components. Current gasoline levels are about 3% below the five-year average for this time of year.
Among products, the most notable move came in diesel, where inventories dropped by almost 4.1 million barrels, deepening the deficit to around 20% below seasonal norms – continuing to underscore the persistent supply tightness in diesel markets.
The only area of inventory growth was in propane/propylene, which posted a significant 5.1-million-barrel build and now stands 9% above the five-year average.
Total commercial petroleum inventories (crude plus refined products) declined by 4.2 million barrels on the week, reinforcing the overall tightening of US crude and products.


Analys
Bombs to ”ceasefire” in hours – Brent below $70

A classic case of “buy the rumor, sell the news” played out in oil markets, as Brent crude has dropped sharply – down nearly USD 10 per barrel since yesterday evening – following Iran’s retaliatory strike on a U.S. air base in Qatar. The immediate reaction was: “That was it?” The strike followed a carefully calibrated, non-escalatory playbook, avoiding direct threats to energy infrastructure or disruption of shipping through the Strait of Hormuz – thus calming worst-case fears.

After Monday morning’s sharp spike to USD 81.4 per barrel, triggered by the U.S. bombing of Iranian nuclear facilities, oil prices drifted sideways in anticipation of a potential Iranian response. That response came with advance warning and caused limited physical damage. Early this morning, both the U.S. President and Iranian state media announced a ceasefire, effectively placing a lid on the immediate conflict risk – at least for now.
As a result, Brent crude has now fallen by a total of USD 12 from Monday’s peak, currently trading around USD 69 per barrel.
Looking beyond geopolitics, the market will now shift its focus to the upcoming OPEC+ meeting in early July. Saudi Arabia’s decision to increase output earlier this year – despite falling prices – has drawn renewed attention considering recent developments. Some suggest this was a response to U.S. pressure to offset potential Iranian supply losses.
However, consensus is that the move was driven more by internal OPEC+ dynamics. After years of curbing production to support prices, Riyadh had grown frustrated with quota-busting by several members (notably Kazakhstan). With Saudi Arabia cutting up to 2 million barrels per day – roughly 2% of global supply – returns were diminishing, and the risk of losing market share was rising. The production increase is widely seen as an effort to reassert leadership and restore discipline within the group.
That said, the FT recently stated that, the Saudis remain wary of past missteps. In 2018, Riyadh ramped up output at Trump’s request ahead of Iran sanctions, only to see prices collapse when the U.S. granted broad waivers – triggering oversupply. Officials have reportedly made it clear they don’t intend to repeat that mistake.
The recent visit by President Trump to Saudi Arabia, which included agreements on AI, defense, and nuclear cooperation, suggests a broader strategic alignment. This has fueled speculation about a quiet “pump-for-politics” deal behind recent production moves.
Looking ahead, oil prices have now retraced the entire rally sparked by the June 13 Israel–Iran escalation. This retreat provides more political and policy space for both the U.S. and Saudi Arabia. Specifically, it makes it easier for Riyadh to scale back its three recent production hikes of 411,000 barrels each, potentially returning to more moderate increases of 137,000 barrels for August and September.
In short: with no major loss of Iranian supply to the market, OPEC+ – led by Saudi Arabia – no longer needs to compensate for a disruption that hasn’t materialized, especially not to please the U.S. at the cost of its own market strategy. As the Saudis themselves have signaled, they are unlikely to repeat previous mistakes.
Conclusion: With Brent now in the high USD 60s, buying oil looks fundamentally justified. The geopolitical premium has deflated, but tensions between Israel and Iran remain unresolved – and the risk of missteps and renewed escalation still lingers. In fact, even this morning, reports have emerged of renewed missile fire despite the declared “truce.” The path forward may be calmer – but it is far from stable.
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