Global Gas Prices Expected to Rise Amid Tightening Supply

According to a recent research note, UBS analysts predict a rise in global gas prices due to tightening supply and demand conditions.

The analysts have increased their gas price forecasts for Europe and Asia by an average of around 9% for 2024, projecting prices of €33/MWh for TTF and $12/mmBtu for JKM.

Although global LNG demand has shown only a modest recovery, concerns about supply disruptions have tightened market conditions. Unplanned outages in Australia and Norway, along with a decrease in U.S. production, have heightened worries about supply availability as the cooling season approaches.

These factors have contributed to price increases, with rates now in the mid-€30s/$12 range. Global LNG imports have remained stable year-on-year.

Looking forward, UBS expects that growth in global LNG imports will remain below the pre-crisis five-year average of 7%, with projections of only 1% growth in 2024 and 5% in 2025. This adjustment reflects a fragile market equilibrium stemming from limited spare capacity, which could lead to price volatility.

However, the situation is expected to improve by 2026 as new LNG capacity additions begin to alleviate market tightness. Despite some project delays, a significant wave of new capacity is anticipated to come online by 2026.

UBS’s demand forecast for global LNG from 2026 to 2030 remains largely unchanged, with decreased European LNG requirements being balanced out by increased imports in Asia.

The research note also points out that recent supply disruptions have established a new price floor of around €30/$12. UBS anticipates that near-term prices will fluctuate within a narrow range in the low-€30s/$11 before rising to the low-€40s/mid-$10s in the fourth quarter of 2024, driven by higher seasonal demand.