Market risks

Despite the promising outlook for natural gas in 2024, several market risks could significantly impact price and demand trends. One of the main risks is the continued volatility of LNG production, which has already seen declines due to raw gas supply issues and unexpected outages. If these production issues persist or worsen, they could lead to a supply tightening, exacerbating price volatility and potentially dampening global demand.

In addition, the geopolitical situation remains highly uncertain, particularly regarding energy supplies from key regions such as Russia. Any escalation in geopolitical tensions could disrupt supply chains, leading to further instability in natural gas markets and complicating the expected recovery.

Another significant risk is the possibility of a slower than expected economic recovery in key demand centers, particularly in Asia. While China and India have driven much of the recent demand growth, any slowdown in their industrial activity due to economic headwinds could reduce demand for natural gas and undermine the optimistic outlook.

In addition, the expected recovery in LNG supply, particularly from the US, may not materialise as quickly or as sharply as expected. This could lead to an imbalance between supply and demand that could either cap price increases or result in unexpected price spikes.

Finally, while the promotion of low-emission gases is a positive development in the long term, the transition may be delayed, limiting the expected contribution of these cleaner energy sources to global gas supplies and making the market more vulnerable to traditional supply constraints.

Conclusion

In summary, the natural gas market is showing signs of a significant recovery in 2024, driven primarily by strong demand growth in Asia and supported by a favorable long-term investment environment. Despite challenges such as sub-par LNG production and geopolitical tensions, market fundamentals are gradually strengthening.

The recent price recovery from the first quarter lows and emerging bullish technical patterns suggest that natural gas is poised for a potential rally. With global LNG supplies expected to recover and low-emission gases playing an increasingly important role, the market appears poised for continued growth. However, ongoing volatility and geopolitical factors will continue to influence price movements. Investors may consider investing in this region, focusing on long-term investment objectives and targeting the $7-10 range.