PIRA Energy Group reported that broader spot LNG supply availability persists. In the US, an underweight 90 billion ft3 storage injection provided the NYMEX gas market with some rare bullish ammunition, and in Europe, suppliers responded with cuts to weaker European market.
Almost every major LNG producer in the world is offering third quarter spot cargos, including new producers in Papua New Guinea. The lack of incremental demand for spot LNG speaks volumes about the amount of LNG already under long-term contract compared to previous years.
Despite bearish EIA report, US inventories to top 3.5 trillion ft3 by end of October
An underweight 90 billion ft3 storage injection provided the NYMEX gas market with some rare bullish ammunition. The report prompted the nearby contract to add on another 5¢ following modest gains in earlier trading. The up move stalled around resistance at approximately US$ 3.85, close to where the nearby contract ultimately settled.
Cuts to weaker European market
Supply responded to the extensive length in the European gas market in July in the form of greater restraint by marketers in the face of high storage levels and lower seasonal consumption. Along with nascent increases in underlying gas demand for the first time in quite awhile, the spot price support that began to build late in the month was completely justified, although it has its limits to the upside. Spot price support will remain in place in August, as heavier field maintenance will begin in Norway, Asian LNG demand will pick up for seasonal reasons, and Russia will continue to show supply restraint in the face of weaker customer demand.
India’s fertiliser producers in need of lower cost gas
The Indian Fertilizer Ministry has demanded a near 50% increase in domestic natural gas allocation to urea plants to replace costly imported LNG currently being used as feedstock, which will save US$ 2.5 billion in subsidies. As the allocation from domestic fields falls short of requirement, urea manufacturing units are using imported LNG which costs nearly three times the delivered price of domestically produced gas.
Adapted from press release by Ted Monroe
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/01082014/pira-energy-group-weekly-natural-gas-report-1127/