The latest analysis from PIRA Energy Group reports that milestones have emerged in European gas supply. In North America, most gas prices had month-on-month gains in October along with Henry Hub. In Asia, Japan increases its number of LNG contracts, limiting spot exposure. Analysis of natural gas market fundamentals has revealed the following:
Milestones in European supply
PIRA projects that peak UK gas production this winter will not reach levels that would even cover the low point for UK gas demand in the middle of the summer. Volume is an issue, but it is lower flexibility this winter that is even more significant for price. Russian production in October established the largest year-on-year gain since May 2012.
North American gas price gains for most
The modest month-on-month gain in average daily Henry Hub prices helped lift nearly all regional prices in October relative to September levels, even in Appalachia. Only a few points failed to gain month-to-month, namely those in the Northeast such as Transco Z6 and Dawn in eastern Canada. The clear standout performer was AECO in western Canada, which soared from a low in late September to a high in October.
Japan increases contract volumes to limit spot exposure
Japan is heading into its winter peak under highly unusual circumstances. No nuclear power, combined with a general downtrend in LNG consumption, makes it a challenge to determine how short of spot LNG Japan will be this winter. Spot volumes are clearly being pushed out of Asia in favour of volumes from contracted suppliers within the region as well as in the Mideast.
Adapted from press release by Katie Woodward
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/07112013/milestones_emerge_in_european_gas_supply_399/