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Natural gas price knows no bounds

It was another week of soaring natural gas prices as LNG demand from Asia appears to have picked up and the energy crisis in Europe deepens by the day. Ultra-dry and hot weather across Europe is creating problems with Norway’s hydropower and France’s nuclear facilities. And while water levels on the River Rhine may rise a touch in the coming days, they will remain exceedingly low and will continue to disrupt the transport of coal to Germany. We expect natural gas prices to remain sky-high at least until seasonal demand drops off in the second quarter.

Looking ahead, it is a relatively quiet week on the data front. We expect the August Flash PMIs for the euro-zone to fall further as declining real incomes weigh on demand. There may also be news on the talks between Iran and the West on a revised nuclear deal. If an agreement were reached, Iran’s output and exports would probably rise quite rapidly and we would revise down our oil price forecast accordingly.

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