Russia-Ukraine Natural Gas tension de-escalated but Global market remains bullish

The tension between Russia-Ukraine related to the volatility in the Natural Gas was calmed up to some extent as Russia announced the withdrawal of troops from the border. The Title Transfer Facility (TTF) prices just fell over to $23/MMBtu on Wednesday. In Europe, the market has deciphered Russia's troop withdrawal from the Ukraine border as an indication of de-escalating strains, diffusing a portion of the risk premium the TTF has carried over the past few weeks. LNG imports into the region were vigorous, sitting at 4.9 Million tons so far in February, while demand has been muted chiefly due to milder-than-normal temperatures.

The pace of withdrawal from capacity in Northwest Europe has eased back significantly, with storage levels around 10% below 2021 volumes, contrasted with the 25% under 2021 volumes saw in January. US gas prices are probably going to stay bullish in the short term as freezing weather conditions looks set to go on throughout the following few weeks, spurring additional gas interest for heating. It is expected that Henry Hub will average around $3.5MMBtu for 2022.

In Asia, the trading activities had pickup up pace after Lunar New Year holiday with industrial plant resuming their operations which will eventually increase gas demand, even the LNG inventories in China were ample. High coal costs due to startlingly sluggish resumption in exports from Indonesia and hampered production in Australia have lifted the coal-to-gas exchanging cost, effectively diffusing downward momentum in Asian LNG costs.

According to ChemAnalyst, the global demand of Natural Gas and LNG will surge in different regions. In Europe, with calmness of tension between Russia and Ukraine will most likely allow the flow of Nord Steam pipeline of Natural Gas from Gazprom to the European regions. In Asian region, the demand will surge with increase in consumption of Natural Gas in the downstream derivative market.