Gas price delay could impact LNG demand growth

PIRA Energy Group believes that the potential delay and possible indefinite postponement of an increase to Indian domestic gas prices could have considerable implications for LNG demand growth in Asia this year.

In the US, last week’s EIA update was above market consensus; in Europe, spot LNG prices are expected to fall.

Indian gas price increase

The potential delay and possible indefinite postponement of an Indian domestic gas price increase could have serious implications for LNG demand growth this year, not just in India but throughout Asia.

Withdrawal above market consensus

A considerable withdrawal of 57 billion ft³ was reported in last week's EIA update, a figure above market consensus in the low 50s. The official pull indicated tighter balances than suggested by comparisons to last week.

Spot LNG prices

PIRA has questioned whether it lowered its spot price forecast last month enough. The energy group believes the forecast should be lowered, due to another month of warmer than normal weather and another expansion of the storage surplus for gas. Current prices reflect a weaker demand for gas from upcoming storage injectors, the power sector and the R/C sector, with some improvement in the outlook for industrial gas use.

Adapted from press release by Katie Woodward

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