Gas: Will fundamentals Trump geopolitics?

2025 is set to be a year of continuing geopolitical turmoil. Donald Trump’s return to the White House will raise the temperature further at a time of major instability in the Middle East along with Russia-Ukraine.

Questions remain over where Europe’s gas will come from and a key European power-player, Germany, faces fresh elections in February.

In this episode, we delve into the latest geopolitical developments, as well as the key fundamental drivers, and assess their likely impacts, with Wayne Bryan, Principal Associate at the London Stock Exchange Group (and formerly Director of LSEG’s European Gas Research).

Host: Richard Sverrisson - Editor-in-Chief, Montel

Guests: Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group; Andres Cala – Senior LNG Correspondent, Montel

Editor: Bled Maliqi

Transcript

[00:00:05] Richard Sverrisson - Editor-in-Chief, Montel: Hello, listeners, and welcome to the Montel weekly podcast, where we bring you the latest news, issues and changes happening in the energy sector. This week, we'll take a deep dive into geopolitics and the impact of several factors on global gas markets and energy prices. Next month, Donald Trump returns to the white House. What will be the impact? Meanwhile, the Russia-Ukraine conflict rumbles on. There is an escalation in the Middle East. Volatility is ramping up and up. There is pressure within Europe as there is a political crisis in both France and Germany with German elections looming in February. What does this have to say for the energy markets? What will be the impact? How will they be hit?

[00:00:48] Andres Cala – Senior LNG Correspondent, Montel: 2025 is turning or will likely turn out just a little more stressful? More. Well, just tighter in terms of supply. It will be another geopolitically driven year like 2024, 2024, of course, was the Middle East. It was Russia and the Ukraine war. It was also US sanctions against Russia targeting Russia, which undermine also the, the Russia's attempt to become a significant player or beyond what it is already in the energy sector. Of course, 2025. But it's not only about Trump. There are several things. And for the time being, there are the fundamental issues and that will mostly be related to possible delays or likely delays in projects out of the US. Regardless whether we can expect Trump will embrace LNG production, gas production oil hydrocarbons in general. We know that that's already part of his yeah. His plan for his next four. During the next four years, but especially going to involve LNG exports. And that's because it's a the perfect way to meet Trump's demands, global demands to lower the the tariff deficit, the, the the, the that and he that the US has with many global players, including Europe, including China and including other significant global players so that we know Trump will support LNG because it can be easily used in the tariff wars. Upcoming tariff wars. The last time it happened, China cut its LNG imports completely. Will it will it do it now? But maybe not. And in any case, the market is certainly a better position to just reorganize the supply routes so that China doesn't buy as much us LNG, but it will buy from other players and that remains to be played out of course, there's other issues that could affect the global gas and LNG sectors regarding Trump, of course, but it goes back to geopolitics. How he deals with the Middle East conflict would be will be key to global gas markets next year because it will again depend on that and that the developments in the in the Suez around the Suez Canal or around the Houthis in Yemen of course, in the Strait of Hormuz, right in front of Iran and with with that, that could eventually involve a war, a direct bilateral war between Iran and Israel. And that just changes the equation completely and the Middle East. But of course, there's again there. Russia will remain an important issue, and we will have more supply. We already know that at least two LNG plants are coming online this month. In fact, by the end of the month that's coming. And an an expansion Corpus Christi we're in Cheniere engineers plant. So, yeah, the there are there will be more demand in of course. It remains to be seen also how China's own economy develops. That will also dictate a lot of the fundamentals and how the world manages to balance. But it will not be so different this year. If it gets too expensive, then you will have a lot of price sensitive players come out of the market and there will be more available for Europe, but at a higher price. And of course, that will have a also direct impact, especially if you consider it if you consider you have German elections coming up in February.

[00:04:41] Richard Sverrisson - Editor-in-Chief, Montel: And sat with me listening to that is Wayne Bryan principal associate, London Stock Exchange Group. Welcome back to the podcast. Wayne, how are you?

[00:04:49] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Not too bad. Thank you yourself.

[00:04:50] Richard Sverrisson - Editor-in-Chief, Montel: Pretty good. Pretty good. Now we had. We've heard that scene setter from Andrés Cala. What's what's what's your view of the of the points that he was making? Are you in broad agreement?

[00:05:03] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: No, I do, I do agree in somewhat for next year. I mean, from January 6th onwards, with Donald Trump arriving, it's going to create a whole new situation for markets. I mean, we've had a relative period of stability in terms of with the Biden government. Of course, we've had the geopolitical impacts of several wars happening, but at least we've had some stability now with Trump coming in. You've already seen how he's how he's working. Most people now visiting Mar-A-Lago instead of going to the white House. So that sort of transition of power seems to have already happened. And I think he just brings that uncertainty. And I think I highlighted before, before I joined else when I was working in gas and power trading, he, he used to move these markets like no one's business, just with the fact he releases information straight from his social media accounts, he doesn't really care for any sort of security concerns about what he says. He just shoots from the hip. He's now got these four years to. In essence, once they do what he wants for the wrong way to say it. But I don't think we're going to see a third Trump term, obviously. So I think now these four years, he's really going to try and shape America in the world, how he views it. And we all know that that's not how everyone else views the world. So I expect a lot of volatility, not just in the energy markets, because he has some impacts on that, but also in the broader sense as well. How is he going to deal with the Ukraine situation? How is he going to deal with the now explosive Middle East situation? When you consider what just happened in Syria, how is he going to sort of maintain relations or improve relations or even relations with Russia? There's so many uncertainties. Nato spending. I mean, there's a whole raft of areas that could go into LNG. Of course, oil and gas drilling. He's already drill, baby. Drill is his, you know, one of his sort of statements. So I think, yeah, it's going to be underscored by some Trump volatility for sure.

[00:06:48] Richard Sverrisson - Editor-in-Chief, Montel: Yeah, absolutely. And I touch on those. A little bit later, Wayne. But what would have been the key events in 2024 for you?

[00:06:57] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: There's been a lot going on. In terms of gas markets. We've had you know, we've had lots of concerns around storages, both in the build up to winter and then towards sort of end of last year, how we're going to sort of fill these storages is the constant narrative. One thing that's been interesting is industrial demand remains seriously suppressed. There's been some really bad economic numbers of late, and that's been a sort of recurring theme. And we thought probably it was going to rebound a little bit more. But that's been, you know, really subdued. And the outlook isn't as rosy as we once thought for that part of the market. Lng we've had a bit less LNG these last few months and we've seen the impacts of that. We've had the Duncan Flower situation recently where it really exposed the fragility of the European energy system in the absence of gas. What would have made up that gap? And we saw a huge withdrawal of storages, I think, last week. Week 51 of one of the biggest draws of storages we've seen. So there's just a whole lot going on. I mean, it's hard to think back exactly now to every single event. But we've now got Gazprom sanction payments. What's going on there? We've got uncertainty around, you know, Ukrainian transit as well and lots of stories around that. So yeah, it's been an interesting year for sure.

[00:08:15] Richard Sverrisson - Editor-in-Chief, Montel: I'd like to play another little clip for you Wayne. And this is from a previous podcast with you and Tobias Federico from April. And this is what you both had to say when I asked what impact and newly installed President Donald Trump in the white House would have on the global situation and on LNG and gas. So let's just listen back now.

[00:08:36] Tobias Federico, Director, Montel Analytics: The thing is that it could be become the worst nightmare, as US mentioned today. And Richard, this was really good. Donald Trump is like a hand grenade throwing into the hole whole geopolitical risks. And we really see that looking into LNG. Well, we might have two possibilities. One is gas first for America, because having low gas prices means an increase for their economy and economic growth, which also means then less gas for the whole whole world market. And then depends on how we react in the Far East. Might, might well be that we will get a gas shortage in the first step, or it could be the other way around here. We will sell our gas, but on our terms, which means increasing gas prices. So both ways, I think it's quite likely to have increasing LNG prices for Europe.

[00:09:24] Richard Sverrisson - Editor-in-Chief, Montel: So I mean, he's a businessman. He doesn't want to, you know, cut off his nose to spite his face. Does he really.

[00:09:28] Tobias Federico, Director, Montel Analytics: Yeah. But he wants to earn money. So.

[00:09:30] Richard Sverrisson - Editor-in-Chief, Montel: Yeah. Exactly.

[00:09:31] Tobias Federico, Director, Montel Analytics: Selling the same volume at a higher price.

[00:09:33] Richard Sverrisson - Editor-in-Chief, Montel: But you've mentioned as well before, Wayne about potential tariffs with China that could come into play. How do you see that?

[00:09:43] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: As I mentioned earlier, I think there's literally a hand grenade into the sort of global geopolitical situation at the moment. And I think nothing's off the table and that's what's concerned. And I think when Trump was last in power, I was I was in my previous role traded, and I used to have his Twitter feed up on one of my screens because he would say things that even his team wouldn't know about, just straight to the world. And some of that was related to oil, for example, used to move a lot on his comments. Of course, what he did with the gas market in terms of, you know, let's just ramp up and export, tear up all of these environmental agreements, ramp up production, and let's get, let's get, let's get America and back in business again. So I think you've got that impact as well. But also like Tobias said, you've got the chance of increased prices. But back to the tariffs. Of course I've already seen I mean I've started to watch a few of his rallies. Now I'm not a fan, by the way, but just to gauge how he how he is and I've heard him mentioned tariffs and China's still playing us and NATO and I'll stop the EU. He'll walk into office with about 3000 ideas and no one to know which way he's going to turn next. And that, for me, is the concern and the one thing I associate with Donald Trump volatility.

[00:10:51] Richard Sverrisson - Editor-in-Chief, Montel: So when the hand grenade is on the way back to the Oval Office. I mean, how do you view what you said in April now? I mean, what kind of do you do you think the impact will be the same 3000 ideas? The, the you know, the main price driver for global gas could be his Twitter feed or now his ex feed. You know, I mean, how do you view that standing or sitting where you are now?

[00:11:14] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Well, I think the tariff thing definitely was true. I'm seeing now I think he's proposed 60% or 10% on imports into into the US as well. Mexico, Canada. So tariffs is this big thing that can obviously disturb global trade in terms of his Twitter feed impacting gas markets. Not as much now because what are his influences? I mean yes, we know about the LNG export pause, but that really wouldn't make any difference at the moment. Short term anyway, we all know he's going to roll that back, but it's not going to make any difference in the short term. We all know about the wave of LNG capacity that's coming online over the next two years. I think more for the just for the terms of what he may do. He can impact how the global markets are functioning. And with the tariffs, higher cost inflation, all these sort of things could impact indirectly impact the gas markets. And that's where I think he could more or less impact it. Not not as direct as, as for example, on the likes of oil markets and where he's got a bit more influence in terms of the reserves and drilling, etc.. So but yes, what he will say will move the commodity complex as a whole, as we've seen before. But I don't think you can say he'll have a massive impact on the gas market because we've got our own drivers at the moment. But he will have some small impact when you consider the relationship with other commodities.

[00:12:31] Richard Sverrisson - Editor-in-Chief, Montel: Do you think he's going to be more predictable? I mean, you mentioned his unpredictable unpredictability and these kind of 3000 ideas. Do you expect it to be more kind of not as volatile.

[00:12:43] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: I expect him to. You know, you've seen him over. Over recent months and just his rhetoric. And actually I think he dialed it down a little bit when he was trying to get him to get into the Oval Office. And now he's achieved that. I think you hear some of his recent words and you see the people that he's speaking to, and he's got a lot to do. And on the back of his promises about ending the war in Ukraine in 24 hours, which we know is impossible, and his views on the Middle East. So but he's walking into a lot on his on his first few days. But I think as we sort of as we move through the first couple of months, we'll get a better understanding of what exactly is plans are. And again, he'll throw in those, he'll throw in these odd quotes and and sort of ideas that will throw people.

[00:13:27] Richard Sverrisson - Editor-in-Chief, Montel: Absolutely. And I think what about you mentioned the delays in LNG products. What's the status here. What will Trump or Trump do.

[00:13:35] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Well, he said the the sort of the pause on export exports in terms of new, new facilities. Obviously, Biden put a pause on that, a temporary pause. Well, Trump's already said the first thing he'll do when he gets into office is rip that up. So that's that. He's already stated that several times. And like I said, it's not going to make a huge difference over the next sort of 12 to 18 months. A bit more further on. Yes. Maybe there'll be more LNG export capacity coming out of the United States. But as it stands, I don't look at it impacting the sort of global balance over the next 12 months. More about sentiment further on,

[00:14:10] Richard Sverrisson - Editor-in-Chief, Montel: Further on.So maybe when we get into 26, 27. Yeah. Yeah, absolutely. How about China? I mean, you mentioned the tariff situation. What about Chinese gas demand? And, you know, as in terms of US supply or just generally globally.

[00:14:25] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: In terms of sorry?

[00:14:26] Richard Sverrisson - Editor-in-Chief, Montel: Sorry, Chinese gas demand. How do you see that panning out?

[00:14:29] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Well, we've seen Chinese demand at the moment is not that strong. You've seen them reselling LNG cargoes into the market. We've seen increased gas into storage facilities, obviously. But again, looking at the some of the economic forecasts, it still doesn't look that rosy. And I think the if there are these huge new tariffs being imposed that's going to have an impact on production, industry, etc., which could then impact demand as well.

[00:14:57] Richard Sverrisson - Editor-in-Chief, Montel: And how about the Middle East? I mean, you mentioned here that, you know, he's pledged to to end the or at least mediate some of the issues in the Middle East. How how do you see this? I mean, Andreas in the scene setter, talked about the Strait of Hormuz and the Houthi rebels. How do you how do you think Trump when you throw Trump into the mix there? What do we get out of it?

[00:15:18] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Decisiveness probably is one thing I will say about him. If he's if he's got an idea and he'll run it through. And I think that'll be one of the priorities is to sort of cool the tensions down in that region. You've seen the recent attacks on all the Syrian infrastructure, military infrastructure, not just from Israel, but also from Turkey as well. I mean, at that place is a is a tinderbox at the moment. It looks like the Russians are going to be withdrawn. If you look at these latest satellite pictures of the activity around the bases in Syria. So I think he'll go in strong there. But again, you couldn't ask me now what what will he do? He'll try and cool things down, of course, but in what way and who will it benefit? He's already, as you know, he built the US embassy in Israel. He's obviously pro-Israel. But again, it that that Middle East situation is, you know, is is a tinderbox. And I think maybe he will in some way, because people know if you look at his last term, he, you know, he was in dialogue with North Korea. We didn't see any weapons being tested as soon as Trump left. Kim Jong un took that as a sign. There's obviously lots of missile tests. There's also North Korean troops in Russia at the moment as well. So I don't think these sort of things happen with Trump in charge. But now, like I said, he's got a lot to lot on his plate in his first few days of office. So I think I'm not the only one. But I think most of the world is waiting to see what his actual approach will be. I mean, he's obviously a changed person. We're talking for years and things change. So let's see. We wait and see what version of Trump we're going to get. But like I said before, indeed, I still think whatever happens this this gentleman brings a lot of uncertainty and volatility across global Markets.

[00:17:01] And Wayne sort of moving on to another conflict. So when we look at the Russia-Ukraine, the Ukrainian PM, Dennis Merkel, announced only this week that the deal allowing Russian gas to transit through the country will not be extended beyond the end of the year. What what's your view here?

[00:17:18] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Our base view is flows.Won't continue. Well, the existing contract won't be renewed. Is our is our first view. And now there's a lot of talk of different options. Azerbaijan. We've heard stuff about Poland now coming into the mix and extra LNG and then supply from Poland. So there's a whole raft of ideas you've seen, I think it was Italy, Austria and Slovakia. They sent this letter to the EU saying that, you know, please do something. I think the point is, and again, we're speaking with my colleague Yuri, who I think was speaking to Lawrence the other day about this. And I think the point is Ukraine have stated something where they said no Russian gas. So if some compromise can be met where it's not Russian gas, maybe it's sold to another buyer and then put through as non-Russian gas. Would that be palatable? I don't know, but one thing you do know is there won't be a continuation of Russian molecules through Ukraine. And if you look at the recent auctions, there's been no capacity purchased. So again, looking at, I think the Gazprom supply to Moldova, into sorry through Ukraine, into Moldova, that is going to cease. And there's so far been no capacity. But and I think Gazprom came out and said they're looking at alternative ways to supply the Transnistria region with about. I think it's about about three MCM per day of gas. So that's also a sign as well.

[00:18:40] Richard Sverrisson - Editor-in-Chief, Montel:  I just want to play you another little clip from a previous guest. This is what Nadia Martin Wiggen, who's director of of of Svealand Capital hedge fund, told us about this, this situation back in September.

[00:18:55] Nadia Martin Wiggen – Director, Svelland Capital: There is within the European Union a lot of pushback about allowing this gas to go forward. However, we currently have a deal potentially being negotiated with Azerbaijan where they could be the go between Russia and Ukraine. Specifically, Azerbaijan would supply that. Guess not the entirety of 15 BCM, which is the volumes we're talking about at stake here could be fulfilled by Azerbaijani domestic production that only rose 0.6 BCF last in in the last year, year on year, and we've either spare capacity at or less than five if you include them. And Kazakhstan. So there would have to be a complicated swap agreement between Russia and Azerbaijan, meaning that Russia provides the gas to Azerbaijan, and then Azerbaijan then exports more of its own gas instead of using it domestically to Ukraine. However, there's also pushback on the pipelines with Gazprom on whether Azerbaijan would actually physically send that gas or if it would actually be coming from Russia. So this is where it's complex. And of course, if we're still using Russian gas, then it defeats the whole purpose, hence to push back within the European Union. However, given the difficulty in the economic situation, in particular for Germany there are members of the group and the direct recipients of this Ukrainian gas that would very much like this sort of deal agreed with Azerbaijan.

[00:20:34] Richard Sverrisson - Editor-in-Chief, Montel: Well, two of you here, Wayne, do you agree with that view? Do you think there will be some kind of deal brokered to meet the needs of those the member states that you mentioned?

[00:20:43] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Well, I think the main challenge is, is I think she highlighted it very well. Is, is the political sell in this politically? We can talk about swap deals. We still know where the molecules are coming from. Right. This may placate Ukraine. Still not sure about that. But again the transit fee situation might come into I think it's 2 to 3% of their income comes from transit fees. So I think the political sell is quite hard on this. We talk about this, you know, reducing our overreliance on Russian gas etc.. We've been making steps. Lng is a different story. So I think politically it might face some hurdles, but this is something again, I think we we're hearing 2019 with lots of will. They won't they will they won't they. We expected they would actually, we we did well because of that. And obviously they did. And again, I've mentioned this before, but I've been in this market long enough to you can never be surprised. So as much as the view from our team, the gas team else there is flows won't continue, there might be some kind of fudge and there's still time to do that. So for me at the moment, 7030. No, but there's a chance I think, of something will be agreed. But it's the market's priced and it won't. Obviously if you look at the market now there's been some rumors and there's been lots of smoke. And that's again what you you know there's no smoke without fire as they say. And there's been a lot of smoke over recent months about a workaround. And as we both just mentioned, this, you know, this plea from the from these member states is is kind of telling really and putting the pressure on. So I'm sure there's a there's a lot of dialogue going on now. And we've still got where are we today. You know, it's the 19th. We've we've still got, you know, 11, 12 days to go. So I'll be keeping an eye in the news for sure and looking at what potentially could happen. But as it stands at the moment, the market is not pricing that in.

[00:22:38] Richard Sverrisson - Editor-in-Chief, Montel: And so when you're tucking into your Christmas dinner you're unwrapping your presents. Will you have one eye on your screen they're waiting to see? Because do you expect kind of shenanigans to happen over Christmas.

[00:22:49] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: On Christmas Day? I don't think my family would allow that. But yeah, I'll be taking a look at keeping an eye on things over the Christmas period because it is a pivotal moment, even though, like I mentioned, we expect it not to continue and the market has already priced that fact in. Pressures may succumb on either side. Really. And then we could see some sort of agreement.

[00:23:12] Richard Sverrisson - Editor-in-Chief, Montel: But finding this alternative to Russian gas, especially for those countries that you've mentioned, the Eastern European member states as well as Austria, Italy, that's very, very difficult. And how successful have they been in trying to wean themselves off Russian gas and finding alternative supplies?

[00:23:29] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Italy's done well, obviously through LNG. If you look at the addition of recent regasification facilities, the FSU just arrived as well. So I think Italy's, you know, done well. It's done really well. Similar to, to Poland, what they did as well, they managed to make some good moves again using LNG. So I think LNG is the gateway to that. And but again, that's that highlights the problem really. For LNG to arrive we need to be at a premium. And you've seen European market will do that when it needs that LNG prices will rise. But again you're paying for that additional sorry loss of supply but at what cost. And I think that's the question is is the cost. But we've seen some great move considering where we were, you know, two years ago to come. We've come quite far, I think, over these last couple of years in terms of making up for the overreliance of pipeline gas, but it's come at a cost. When you look at the prices, when you you look at the industrial situation, what the high price environment did to that. So that for me really is they've done well, but it's the cost really. That's the concern. And we were lucky. The last two winters have been mild and we've seen the effect of milder weather on the gas prices recently. I think we look at the front month contracts, they're down almost 20% for January over recent weeks. But then conversely, you saw when we had the as I mentioned, the low wind or Duncan flower or anticyclonic gloom that impacted renewable production. And again, gas prices as we saw, completely rallied and then eased back down. But again, it's that fear factor that's been supporting the price. And again, that's because of the tightness and the fact we're now part of this global gas market. And we have to fight for these volumes in order to satisfy storage requirements, especially with the new guidelines in place. And the challenge is to fill that. And as I mentioned before to you. If you look at the sort of backwardation now in the summer and winter,

[00:25:28] Richard Sverrisson - Editor-in-Chief, Montel: The explained backwardation to those listeners. Sorry.

[00:25:30] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Typically, for example, the the summer contract would typically trade at a discount to the following winter, summer less demand, etc., etc.. So that's the typical market state or contango. What we've seen since the sort of end of October is a real switch in sentiment. As then cold weather forecast kicked in and the prices started to rise. That force. Now the summer contract is trading above the winter contract, which this incentivizes injections into storage economically of course. And that spread is actually moved a little bit of late, but it's still there. And if we we look at the peak of it, the peak of the spread was sort of middle of that sort, 20th of November, where it hit for just over €4 per megawatt hour. It's now half that, but it's still at €2 per megawatt hour summer premium over winter. That tells you the market is still nervous. And if you look at the following, it's similar as well. So the market isn't convinced at the moment. But what's interesting is I think I've said this before. The way the market perceives sort of the winter now compared to a couple of months is quite different. We've had a couple of cold spells, but nothing major, no sustained cold spells when those cold spells have come. And of course the low wind, we saw storages step in to fill that latest forecast. Tell you January is not going to be as cold. So really we've knocked off October November. We're in December now. About to end it again. Look at the weather today here in London. It's again it's still quite mild seasonally. So we've knocked off literally three months. If you had January it could still change the way that we know that. So you're talking we've already knocked off almost four months of the winter. We've got February and March to come. So we would expect if February now turns mild. And I look at these sort of longer term forecasts, which still look like they could be quite mild, our latest meteorologist forecasts said relatively mild, probably Q1. So if that does transpire, you'll start to see again we're knocking off that risk. So we're reducing the risk. Premium spot prices just come down. So the spread should adjust. This happens. This has happened previously. If you look at last year prices came off tremendously. And they hit €25 at one point. Again that was a surplus of LNG came in as well as well as the milder conditions. So Europe needs a repetition of that. And I think what we're seeing now at the moment is some sort of semblance of that. But if you look at the price movement, it's very hesitant to deduct below 40. And at the moment, I think if you look at the Feb contract Asia is the premium market. So again, if we if we do get into difficulties, we're going to have to lift that price again. And we saw when it went up to 4849 that's you know we priced Asia out of the market. And then you saw cargoes being diverted back to Europe. So again, we can give the signals, but the signal now is we're kind of okay, but the spread tells you that we're not convinced yet.

[00:28:26] Richard Sverrisson - Editor-in-Chief, Montel: So the market is still quite jittery.

[00:28:28] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Jittery is the word I would use. Jittery on any news. And you've seen the fake news of previously knocked off 7%. And so we've seen all these. The market is still quite jittery around what's going to happen. Like I said, we've still got three months of winter to navigate, although one month at the moment looks like the month of January looks like it could be a little bit.

[00:28:46] Richard Sverrisson - Editor-in-Chief, Montel: And often in the past when, you know, we've seen the beast from the East coming in February, you know,

[00:28:50] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Exactly.That's a far from out of the woods. And that's accurately reflected in this current state of backwardation we're seeing in the front two seasons.

[00:28:59] Richard Sverrisson - Editor-in-Chief, Montel: But what are your expectations, then, if I can put you on the spot here, what do you where do you think we'll be in terms of prices in Q1?

[00:29:06] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Well, I'm using our yeah, we just published our monthly report for January. And and what we look at is we look at the storages now Our using our projections. And bear in mind we're looking at Norfolk European storages here. We're looking at Germany, France, etc. North West Europe storages. And if we look at them now, we think the stocks would you know, end January at around 52%. Now that's using our central scenario. Now one interesting thing is if we look at our end of some end of winter, sorry, start of summer forecast, we could see our central and cold scenarios. They could leave storages at 30% and 22% respectively, which, you know, it's it's very, very, you know, way lower than, than last year. So that would be around, you know, you know we're looking at last year the storage levels ended, you know, in a nice ample position in the mid 50%. So if we look at that That's quite bullish. It's only in our mild scenario actually where storages end fill all the way through to November 1st 90% deadline. Only in our mild scenario are we allowed that. And that's taken into account all the supply demand fundamentals expectations based on. Now as we know in these markets things can change rapidly, especially obviously the weather. But our scenarios definitely point to more bullish at the moment again, which is probably reflected in this premium that we're seeing in terms of summer over winter, in terms of prices. We're kind of in our base case scenario, sort of sideways bullish for January day ahead price, probably around the 4041 where it's sort of sitting. Now in our mild case scenario, we could probably see that day ahead price around the sort of 38 mark average throughout this is throughout January. So again the weather's having an impact of course, as it does. And we saw that recently with these ever milder revisions pushing the price lower and lower. And, you know, I was working on the Morning Report last week and that kept happening.

[00:31:22] Richard Sverrisson - Editor-in-Chief, Montel: But they're not dramatic price swings here. We're talking sort of 40 to 38 potentially dramatic.

[00:31:28] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Because again, you need to have a certain price level to ensure that if this cold spell perhaps comes in February, then you need to lift the price. Or like you mentioned, beast from the East came, you know, can come in March, could see a cold April. So there's you know, there's a few factors still that that can impact this. But as it stands at the moment, you know, if you look at these projections and I've seen other people projections as well. And I think we still have concerns. And again, I keep highlighting it. But that spread really, really highlights that that concern in the market at the moment. And don't forget as well we've had these, you know, this year we've seen a lot of more interest from financial players. So you look at the latest traders report you know you see changes there and investment funds now really moving this market about. And we've seen that over recent weeks with some of the exaggerated moves and then the bounce back. So that's also been a sort of interesting factor this year for me.

[00:32:19] Richard Sverrisson - Editor-in-Chief, Montel: It's all about the weather in a way, isn't I mean, that's what it boils down to. We've seen what happens when there is no wind, when there is at night, when you know, there's a lack of solar and wind generation as well as, you know cold, slightly colder temperatures that's that caused panic, not panic, I would say. But it certainly caused prices to absolutely skyrocket early this year. Yearly highs and multi-year highs for some hours in frozen in Germany and for power anyway.

[00:32:48] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Oh power was yeah super bullish.

[00:32:50] Richard Sverrisson - Editor-in-Chief, Montel: Absolutely. So so in terms of you know, I mentioned it in the scene setter, I also reflected on it in in terms of Germany. We've had we've had, you know, in politics there's political chaos in France and Germany. There's elections in Germany coming up. Do you think that will have any impact on, on on gas and the gas. Global gas market.

[00:33:11] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: I think the one impact I was going to mention, obviously, was you look at the storage level. It looks like that's going to be abolished now, which is good news. I'm certainly good news. I think in terms of, yeah, there is some big change in terms of political. They've been quite green in Germany. How will this new coalition or the new government, how will that work? So there is yeah, slight concerns around that. There's also with France. I mean that again is is a quite difficult situation. But again I don't see I see more of an impact. You see more of an impact from the German side on the market than the French side personally. But again, sorry, but again, these geopolitical concerns will continue to to provide some volatility. But of late it's been mainly a fundamental driven market which we like I think.

[00:33:55] Richard Sverrisson - Editor-in-Chief, Montel: Absolutely. So we keep an eye on the weather and what happens with Trump the hand grenade.

[00:34:00] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: And of course let's not forget you know what's going to happen post December 31st in terms of the flows Russian flows, transit flows of our Ukraine.

[00:34:09] Richard Sverrisson - Editor-in-Chief, Montel: Absolutely. Well, I hope you can you know, have peace and quiet when you're talking to your Christmas dinner. Wayne, there's certainly a lot to to keep an eye on in the coming weeks. Indeed. Thank you very much for being a guest on the Montel Weekly podcast.

[00:34:22] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: You're welcome.

[00:34:23] Richard Sverrisson - Editor-in-Chief, Montel: So. So, listeners, just after we finished recording, we have a big announcement that has moved gas prices and gives us some indication what to expect in the coming weeks. Wayne, what was the news and what happened?

[00:34:36] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: Well, basically, I think Putin has this sort of national address where he invites questions from the public and people can ask him what he thinks about certain things. So of course, the the transit deal came up and he stated a couple of things. He said, it's clear there won't be a transit contract. We will survive it. He said Ukraine have shut down our gas supplies to Europe. He said it's not our problem anymore. He also said we'll increase our share on the global LNG market, which is interesting when you think about the recent sanctions on different LNG projects. And he said they're afraid of competition, which is why their sanction is. But they will not be able to shut down our projects. We will get this gas into the global market. So very strong statements from Putin, and we've seen a good 3 to 4% up on the market as it stands now. Again, it just highlights the sort of a that some people might have thought it still would have happened. Some people are not sure. But now and this to me again isn't a certainty. But again, it really highlights that from the Russian side it seems they're very keen to extend it, but it seems from the Ukrainian side that there may be doubling down now, but again, we've still got, as I said earlier, we've still got ten days or 11 days left till the end of the year. And again, nothing is ever impossible. But yeah, quite interesting that this story broke as we were having a conversation. And of course, the subsequent impact on the market in these strong words from Putin directly on the subject.

[00:36:01] Richard Sverrisson - Editor-in-Chief, Montel: Let the games commence. Yeah, indeed. Thank you Wayne.

[00:36:04] Wayne Bryan, Principal Associate (formerly Director, European Gas Research), London Stock Exchange Group: You're welcome.