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Our specialists compile a Market Drivers report each month.

We have highlighted Bearish drivers, expected to contribute to the market lowering, and Bullish drivers, expected to contribute to the market going higher.

Bearish

– Record high North West Europe stocks throughout December
– Weather outlook for the rest of December looks warmer than seasonal norms
– Commissioning of the first German FSRU in December adding LNG regasification capacity to NEW
– Forecast for higher production availability from Norway amid increase Kollsnes capacity

Bullish

– The implementation of the recent threat for remaining Russian supply via Ukraine to be cut/reduced
– Potentially further delay in Freeport restart
– Risk of changing weather forecasts over winter
– Risk of lower French nuclear output with outages now becoming more frequent.

Generally, markets saw mixed movements through November initially kicking off with substantial losses on the back of unseasonably warmer weather and high wind generation. The end of the month however saw a change in direction with markets closing the month higher than previous, this was amid colder temperatures forecasted for the start of December.

Temperatures across Europe have remained mostly above normal, curbing typical levels of commercial and residential heating demand. This has allowed storage to reach elevated levels. In recent days we have observed some withdrawals as winter heating demand commenced.

Storage levels in the EU are currently at 95% versus the five year average of 86%.

The flurry of LNG arrivals to the Atlantic basin continues to suppress curve contracts with Asian demand remaining muted.

Looking forward, the markets are going to be nervous to changing winter forecasts with traders keenly looking at this. The outlook for healthy storage stocks by the end of December provides a bearish price driver. We will be halfway through the winter and risk of storage shortage feared ahead of the winter should be heavily mitigated.