Analysts at J.P. Morgan Chase (JPM) expect European and Asian natural gas prices to rise in Q3 as Europe competes with Asia for LNG cargoes to replenish storage ahead of winter.
Speaking during J.P. Morgan's LNG Speakers Series webinar, vice president Otar Dgebuadze said the bank also remains bullish on gas prices in Q4, as current European prices were insufficient to attract cargoes by outbidding Asian buyers.
"We expect prices to go higher for a simple reason that Europe will need to outbid Asia, and we don't see it happening at the 45 euros ($51.40) price level," he said.
The Dutch Title Transfer Facility benchmark will average 55 euros ($62.87) per megawatt-hour in Q3, with the Asian Japan-Korea Marker benchmark expected to follow suit, according to the bank's forecasts.
J.P. Morgan also remained bullish in its outlook for Q4, while noting that it would largely depend on Qatari LNG supply, weather conditions and the strength of El Nino-related demand.
Dgebuadze also warned that if the bank's outlook for Q3 did not materialize, it would mean that European natural gas inventories were set to end the injection season with critically low storage.