LNG short-term trade and price outlook (Q3 2021)

Strong global LNG production and imminent flows from Nord Stream 2 will loosen European gas balances. This should ultimately conclude the six-month rally in European gas, global LNG and eventually thermal coal markets. Increasing European gas supply: Gazprom has recently indicated that 5.6 bcm gas could flow through Nord Stream 2 this year. Winter hub prices retreated on the news but caution should be maintained given the low levels of Gazprom’s storage position and low capacity bookings that have been made on the Yamal-Europe pipeline. This targeted 5.6 bcm will also unlikely be entirely incremental flows, given current underutilization of existing routes. As we move towards mechanical completion of the pipeline, attention now turns to the rate of ramp-up. We forecast a faster ramp-up than when Nord Stream 1 commissioned, given that both upstream and downstream assets are already in place.