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PIRA weekly natural gas recap

LNG Industry,

NYC-based PIRA Energy Group reported that the spot market remains long, awaiting Asian 3Q buying for peak summer demand. In the US, last week had the fifth largest injection on record. In Europe, producers are playing a central role in European spot price outlook.

Spot market remains long

With Brazil now set for supply over the next month during the World Cup, the buyer's market in place will continue to drive prices lower. Asian summer buying is next up on the docket but not yet noticeable. Europe's option to store unwanted LNG is beginning to thin, as storage levels at the end of May were closer to what is normally seen in the middle of July.

Fifth largest injection on record, but futures rally

In what has become an increasingly familiar trend, early-week NYMEX’s upside momentum was arrested following another modestly higher than expected storage build. More specifically, last week’s EIA report revealed a 119 billion ft3 injection that was not only 3 - 4 billion ft3 above consensus estimates but also marked the fifth largest weekly build dating back some 20 years. It also resulted in the largest increase relative to the five-year average thus far in the 2014 injection season at approximately 26 billion ft3.

Producers play central role in European spot price outlook

PIRA believes that if one or more of the major gas suppliers do not cut back production significantly and soon, spot prices are going down severely. The threat of a Russian gas cut-off appears to be diminishing with every public pronouncement, but the situation with European gas balances has become so weak that some combination of Russian, Norwegian, Algerian or Dutch reductions is going to be necessary one way or another.

The information above is part of PIRA Energy Group's weekly Energy Market Recap.


Adapted from press release by Ted Monroe

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