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Save your reading list Published by Sarah Smith, Editorial Assistant of LNG Industry, Thursday, December 2, 2021 at 15:59
Kaushal Ramesh, senior natural gas market analyst at Rystad Energy, discussed the natural gas market price level, global demand, and the uncertainty caused by the new Omicron variant.
“Natural gas prices may face unfavorable factors from COVID-19 Omicron variants and doubts about the effectiveness of vaccines, which has led to a correction in global energy commodities, but as the legend of falling temperatures and European supply uncertainties continues, the bullish factors remain In play.
"In Europe, forecasts of below-normal temperatures and forecasts of accelerated withdrawal from already low storage levels are supporting TTF prices.
"The storage level has dropped by 4% from last week. Assuming the five-year average consumption from now to the end of March 2022, starting from April 2022, the storage level may reach 21% of nominal capacity.
"However, if we take into account a similar depletion situation as earlier this year, by April 2022, European energy storage may be rapidly depleted to about 12% of its nominal capacity. , This situation may happen. It is not coming from Russia.
“Gazprom will rely on the Yamal-Europe pipeline’s day-a-day capacity reservations throughout December, which may bring some price fluctuations, as traders are still guessing how much trading volume will be achieved each day.
"Furthermore, the recent surge in carbon prices, setting record highs day after day, may hinder any out-of-control plans to convert natural gas to coal.
"That said, Rystad Energy pointed out that LNG imports continue to remain strong. Western and Southern Europe imports were about 6.8 million tons in November, up from 5.7 million tons in October, which may be in 2021.
"In the United States, unanimous forecasts of mild weather into December have placed Henry Center in an area below US$5 per million British thermal units.
"Nevertheless, we have now entered the exit season. If the weather turns cooler and the demand for residential heating increases sharply, the storage space may be depleted at an accelerated rate.
"TTF and Asian LNG prices exceeding US$30 per million British thermal units continue to provide an important source of competitive export demand. Therefore, although the domestic balance has improved significantly, the U.S. market cannot sit back and relax before the international price is adjusted downwards. The supply for self-consumption will always be sufficient.
"In Asia, Japanese and South Korean buyers reluctantly returned to the spot market to purchase January supplies due to continued cold temperatures, expected winters to be colder than usual, and continued production concerns at the Bintulu LNG facility in Malaysia.
“Those who have waited for the price to correct downward in the past few weeks may be disappointed and choose to preemptively, because as we approach the winter peak in the tightest LNG market in history, price risk remains high.
"Chinese buyers are still excluded from the spot market. It is expected that China will steadily increase its imports from Russia's already high pipeline from about 28 million cubic meters per day to a potential 43 million cubic meters per day at the end of the year.
“We have noticed that there has been a decrease in the delivery of LNG ships to China, although this may be related to China’s new laws on data privacy. This may reduce the transparency of the delivery of LNG to the world’s largest LNG importing country, and will help The very turbulent market injected another chaotic factor.
"In addition to the production of the Sabine Pass 6 and Calcasieu Pass facilities now in production in the United States, we can expect that the availability of LNG supply will improve by the end of the year, assuming no further interruptions.
“The feedstock gas from Freeport LNG in Texas, the United States, was tested again at 1.7 billion cubic feet per day, although we need to see it stay at these levels before we can conclude that the volatility test that has plagued the facility since September is over.
"Egypt may also be able to provide some additional supply. From October to November, as domestic demand is generally limited in the winter, Egyptian exports increased by about 45%.
"After rolling off the assembly line on November 16, Australia's Gorgon Train 1 restarted production on November 26. The production loss was limited to two batches of goods, which was only replaced by the suspension of Gorgon Train 3. The train has been offline to repair the pipeline. Its dehydration device. If the power outage lasts for more than a week, this may not make the market better.
Read the article online: https://www.lngindustry.com/liquid-natural-gas/02122021/rystad-energys-gas-market-lowdown/
As part of the transition, Kevin Hunt will step down as president and Chad Bowers will take over.
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