By Alexander Miller, consultant in energy and commodities markets. Eurasia Business news, October 7, 2022

U.S. bank Morgan Stanley has significantly raised its forecasts for liquefied natural gas prices for the next two years amid an expected surge in demand for this type of fuel in Europe, Bloomberg reports.

The U.S. bank estimates that LNG in the spot market in Asia will cost an average of $39.5 per 1 million British thermal units (BTUs) in 2023 and $34.5 in 2024. The forecast for next year has been raised by almost a third, for 2024 – by 57%.

Demand for liquefied natural gas (LNG) is expected to rise by 25 to 50% by 2030, according to Morgan Stanley.

Europe will survive this winter relatively painlessly, even despite a sharp drop in gas supplies from Russia, analysts at Morgan Stanley believe. The problem will become more tangible next year, however, as the region will need more LNG to replenish reserves at gas storage facilities at a time when fuel demand in China is expected to recover from a slump caused by lockdowns.

“We expect a deficit next year,” the bank said in a report.

In 2022, Europe is importing record volumes of LNG. The growth of supplies is facilitated by high prices exceeding prices in the Asian market, which is why exporters redirect tankers to European ports, Bloomberg notes. Thanks to this, as well as the reduced demand for fuel from industrial enterprises, the countries of the region were able to fill their storage facilities by about 90% on the eve of winter.

Next year, Europe’s LNG needs could reach almost 50 million tonnes, analysts say, and even then, reserve levels in most scenarios could be below normal before the 2023/24 winter season.

On October 5 spot prices for gas in Europe for the first time since July 21 are below $ 1600 per thousand cubic meters, according to the data of the London stock exchange ICE. Earlier today, Gazprom resumed the supply of Russian energy to Italy through Austria.

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