Prices under pressure from weak LNG fundamentals

PIRA Energy Group has reported that Asian spot prices in 2Q15 are again under pressure from weak global LNG fundamentals.

In the US, the Energy Information Administration (EIA) reported a bearish injection. In Europe, the unique aspect that the continent plays in the LNG market is that it is just as important for what it does not buy, as for what it does buy, due to the surge in re-exporting LNG.

Global LNG fundamentals

Asian spot prices in 2Q15 are buckling under pressure from weak global LNG fundamentals, combined with a new round of selloffs in crude markets. As a result, the need to optimise every aspect of a company's LNG assets is becoming increasingly important.

The Shell/BG Group deal shows Shell rounding its portfolio with BG’s assets. BG Group was looking towards difficult times on several fronts, mainly due to the collapse of crude oil prices and the lack of an end user market for the large volumes of LNG production and contracted supply on its books.

Gas balance

The EIA reported a bearish injection of 15 billion ft³ relative to 9 - 11 billion ft³ general refill expectations. NYMEX price action was decisively geared to the downside as the contract fell to a new low of ~US$2.52 after the release before closing the day at ~US$2.53.

European gas price

Europe will play an increasingly decisive role in LNG markets this summer, which is likely to offer a preview of years to come. Europe is just as important for what it does not buy as for what it does buy, due to the surge in re-exporting LNG.

Currently, European send-out from terminals is well down in April compared with March. With Norwegian field and processor maintenance starting to shut down, PIRA expects a strong turnaround in LNG flows that will take volumes back near March levels of around 150 million m³/d.

Adapted from press release by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/16042015/pira-reports-prices-under-pressure-601/