Could we see $2 gas in Europe in 2020?

Europe has long been regarded as the balancing market for global LNG and has performed this function extremely well in the last twelve months, with total imports of 105 bcm – a 75 per cent rise year on year. In this period spot prices collapsed averaging less than $4 in the third quarter of this year for both TTF and NBP. Europe absorbed the glut of LNG with some coal to gas switching but mainly by filling storage. Next year will see further increases in LNG supply growth with Europe expecting to absorb the growing LNG supply again. If this winter in the northern hemisphere sees normal temperatures or even a colder winter and Asian demand growth picks up then Europe may again be able to absorb the LNG. However, a warmer than average winter and continued weak Asian growth, could see much less withdrawal from European storage than usual and less room to refill in the summer of 2020. Such a scenario could result in $2 gas prices in Europe next summer.

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