UBS Raises European Gas Price Forecasts for Q4 2024 & 2025 Amid Geopolitical Risks - Investing.com
UBS has increased its price projections for European gas in the fourth quarter of 2024 and 2025 due to heightened geopolitical risks and supply constraints. The revisions reflect concerns over Ukraine's gas transit flows, volatile weather conditions, and a tighter global gas market.
In dollar terms, the European gas price forecast for Q4 2024 has been raised by 4% to $13.5/mmBtu. Despite weak market fundamentals, prices in the third quarter averaged $11.5/mmBtu. For 2025, UBS has also raised its gas price forecast by 2% to $11.8/mmBtu.
The analysts expect European gas storage to exit the winter of 2024-2025 at around 50% capacity, lower than the previous year but above the 5-year average. The reliance on LNG imports is increasing due to constrained piped gas supply.
UBS's revised forecast highlights the impact of geopolitical and weather-related risks on the European gas market. The uncertainty surrounding Ukraine's gas transit flows is a primary concern, along with extreme weather conditions that can significantly affect gas demand.
Looking ahead, UBS anticipates tighter supply conditions globally, supporting relatively strong gas prices in both Europe and Asia. Upside risks include potential supply disruptions and cold weather, while downside risks stem from mild weather and stable Russian gas flows.
In conclusion, UBS's updated gas price forecast underscores the importance of monitoring geopolitical developments and weather patterns for potential impacts on gas prices. Stay informed and consider diversifying your investment portfolio to mitigate risks in the volatile energy market.