PIRA Energy Group believes that the role of the weather will become increasingly important in Asian spot price formation. In Europe, it is difficult to look beyond Ukraine in the European spot price outlook.
Asian spot price formation
Spot LNG price mechanisms are just barely starting to click into a higher gear after bottoming out last month. The biggest question in the months ahead will be whether global LNG market fundamentals have changed so significantly in the past year that the coming winter will not be the seasonal replay of last year’s tight balances and record high spot prices.
One key part of the answer - the weather factor - is unknowable at this point, however the broader point to understand is that weather itself will continue to play a growing role in spot price movements in Asia.
Ukraine and European spot price outlook
A European gas market where Ukraine is not the central focus of attention would be unprecedentedly bearish heading into September. Supply/demand fundamentals are very weak by almost every measure except for a few pockets of growth in power tied to temporary nuclear issues. October marks the first month of the year when imports will be necessary to meet gas demand in Ukraine.
Adapted from press release by Katie Woodward