Natural gas prices are hovering in the $3 range, but analysts say a full rebound will begin after late May. Summer cooling demand, Europe's re-stocking season, and the possibility of a La Niña return are seen as key variables.
On the 9th, Choi Jin-young, a researcher at DAISHIN SECURITIES, said, "Now is the time to discuss the rebound of natural gas prices." Choi noted, "Natural gas is a commodity with distinct seasonality, where inventories will decrease in the U.S. from June, and cooling (electricity) demand will be fully reflected," adding that "once the monthly product exchange occurs after May 20, upward momentum in prices will strengthen."
Europe's re-stocking season is also cited as a factor driving price increases. Amid the challenges of importing Russian gas due to the Russia-Ukraine war, the expansion of U.S. liquefied natural gas (LNG) exports is expected.
Choi said, "U.S. LNG export volumes have surpassed previous levels thanks to regulatory rollbacks on new terminals by the Trump administration," noting that "while the Achilles' heel of a ceasefire between Russia and Ukraine exists, normalizing imports won't be easy." He saw the current favorable environment for U.S. LNG exports as a basis for natural gas potentially reaching $6 this year.
The possibility of a La Niña return this summer is also a key variable. If La Niña occurs, the heat dome phenomenon (calm and dry) in Europe will intensify, and the operating rate of North Sea wind power generation will decline, making natural gas, an alternative power source, more attractive.
Choi stated, "The U.S. Climate Prediction Center (CPC·IRI) has slightly lowered the probability of La Niña occurring in the second half of the year, but considering that last year's El Niño was the fifth strongest until the first half of the year, we cannot ignore it this time either," adding, "Monitoring is necessary as the price of natural gas may exceed initial expectations in the event of a La Niña return."