LNG portfolio contracts deepen market liquidity

PIRA Energy Group has reported that the volume and number of LNG portfolio contracts has rapidly grown since 2010, resulting in a considerable amount of market liquidity that looks set to deepen.

In the US, the gas market’s post-April price rally partly reflects a similar bullish perception. In Europe, the role of Algerian gas in the continent’s balances continues to depreciate.

Portfolio contracts

Starting low and continuing to grow, the volume and number of portfolio contracts has rapidly grown since 2010, bringing with it a considerable amount of market liquidity that will only deepen with new supply coming into the market through 2018.

US market

PIRA’s late-April bullish price outlook was based on the expectation that tighter summer gas balances would alleviate bearish pressures. The market’s post-April price rally seems to at least partly reflect a similar bullish perception. However, the April forecast also raised concerns about the market’s ability to continue to absorb near record-high stock builds ahead of the summer. PIRA continues to foresee bearish pre-July Henry Hub (HH) price risks.

European gas prices

The role of Algerian gas in the European balances continues to deteriorate. Between losses tied to higher Algerian domestic gas demand and losses tied to lower European gas demand in Southern Europe, the decline in flows to the north appears to be approaching the bottom of the cycle.

Algeria has tried to compensate in recent years by sending more LNG to South America and Asia, however with crude prices lower and spot LNG markets very soft amid rapidly growing new supplies, the Algerian LNG volume is poised to turn back in on the Atlantic Basin.

Adapted from press release by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/20052015/pira-reports-on-lng-market-liquidity-788/