Natural gas prices now untenably high

The price of European natural gas (TTF) surged by around 35% this morning, before crashing back down on Putin’s reassuring comments about Russian supply. The latest price moves appear speculative, and we retain our view that it is just a matter of time before supply and demand adjust to bring prices back down.
Caroline Bain Chief Commodities Economist
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Latest natural gas price surge will unwind

At the time of writing, global natural gas prices are soaring. Dramatic moves in global natural gas prices are nothing new and not even very surprising given the extreme weather over the past year or so. In this Energy Watch, we consider earlier spikes in natural gas prices and discuss whether this time is different.

In view of the wider interest, we are also sending this Energy Watch to clients of our Commodities Overview service.

1 October 2021

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Downward pressure on prices is mounting

Commodity prices held up well this week, despite the hawkish tone of the Federal Reserve and continued worries over a messy default by Evergrande, the Chinese property developer. Notably, European natural gas and Asian LNG prices continued to climb, powered by ongoing supply disruptions and unseasonably strong demand. Oil prices also made gains amid concerns that OPEC members are struggling to hit collective production targets which, if sustained, poses an upside risk to oil prices. Looking towards next week, Chinese PMI data are scheduled for release on Thursday/Friday. We expect a continued loss of momentum in industrial activity, which would be negative for commodity prices, especially industrial metals. Investors will also be closely watching developments around Evergrande. We expect a managed restructuring of the company, which should limit the negative impact on China’s metals demand.

24 September 2021
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