The natural gas market has been the star performer within the commodities complex. As strategists at ING note, inventories in Europe are tight and are expected to tighten still further going into 2022. This suggests prices will remain well supported into early next year.

European gas tightness to persist

“We will likely finish the winter season with lower than usual inventories, which should mean that going into spring and summer we'll see strong demand for injections. This suggests that while prices might come off from the elevated levels seen over the winter, seasonally they will still be high for much of 2022.”

“Looking at the forward curve, the Asian market is at a premium to Europe all the way through 2022, with the premium being at its widest early next year. Therefore, do not expect the LNG market to solve Europe’s tightness. The region will need to continue to compete against Asia for spot LNG through 2022.”

“The LNG market should stay in a relatively healthy state through 2022. However, the clear risk to this view is a demand hit due to renewed Covid-related lockdowns or restrictions.”