Investing.com — As Europe heads into winter 2024-25, analysts at Bernstein be aware that the market is exhibiting indicators of tightening, pushed by a number of provide and demand pressures and additional compounded by the potential affect of a second Trump presidency.
In line with the agency’s analysts, the European fuel benchmark, TTF, has climbed practically 30% year-to-date, pushing January 2025 costs to round $12.4/mmBtu, near Bernstein’s long-term forecast of $11.60/mmBtu.
This improve is seen as reflecting a variety of points, from declining home manufacturing to rising world demand for LNG.
The agency explains that European home fuel manufacturing has been dwindling, significantly within the UK, the place North Sea fuel output dropped 12% within the first half of 2024 alone.
In the meantime, Holland’s big Groningen fuel subject can also be present process a whole shutdown, exacerbating regional provide constraints. As Bernstein notes, “with no new fields beginning up,” Europe’s reliance on imports will solely develop.
On the demand aspect, elevated competitors from Asia has heightened stress. China and India, each main LNG shoppers, are stated to have seen close to double-digit progress in fuel consumption this yr.
In the meantime, Bernstein says Brazil additionally grew to become a big LNG importer following a extreme drought that lowered its hydroelectric energy capability, whereas Egypt, historically a web exporter, changed into a fuel importer as a result of home shortages and manufacturing declines on the Zohr subject.
In the meantime, supply-side disruptions from LNG export services, such because the US’s Freeport and Australia’s Ichthys, have added additional volatility, in accordance with the agency.
Including to the complexity, a Trump 2.0 administration may doubtlessly elevate tariffs, influencing European and Asian fuel costs by means of foreign money and commerce impacts, says Bernstein.
For Europe, the confluence of things creates a difficult winter outlook, with Bernstein’s forecast anticipating sustained excessive costs in a decent market.