NYC-based PIRA Energy Group reports that the biggest change on the demand side in the upcoming year for LNG balances stems from the evolving nuclear power generation situation in Korea and Japan. The latest EIA update on U.S. storage indicated inventories declined, but the market’s attention appears fixated on the fallout stemming from the latest polar vortex and potential for below-normal temperatures into February. In Europe, Spanish gas demand is on a downward slope.
Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:
Evolving nuclear power generation situation in Korea and Japan
The biggest change on the demand side in the upcoming year for LNG balances stems from the evolving nuclear power generation situation in Korea and Japan. Demand losses will occur in Korea, while in Japan, PIRA has pushed Japanese nuclear restarts to late 4Q from January, with no significant capacity coming on until late 2015. Thereafter, a significant surge in year-on-year LNG production will begin in late 2015 with the emergence of the first U.S. LNG exports, followed by more volumes from Australia. PIRA is building in new supply from six new LNG trains in 2015 with a capacity to produce 72-mmcm/d of LNG supply. If the plants come online as planned, it would be the single largest year-on-year increase (145-mmcm/d year-on-year) in capacity since 2010.
Evolving nuclear power generation situation in Korea and Japan
The biggest change on the demand side in the upcoming year for LNG balances stems from the evolving nuclear power generation situation in Korea and Japan. Demand losses will occur in Korea, while in Japan, PIRA has pushed Japanese nuclear restarts to late 4Q from January, with no significant capacity coming on until late 2015. Thereafter, a significant surge in year-on-year LNG production will begin in late 2015 with the emergence of the first U.S. LNG exports, followed by more volumes from Australia. PIRA is building in new supply from six new LNG trains in 2015 with a capacity to produce 72-mmcm/d of LNG supply. If the plants come online as planned, it would be the single largest year-on-year increase (145-mmcm/d year-on-year) in capacity since 2010.
Fallout stemming from latest Polar Vortex
The latest EIA update on U.S. storage indicated inventories declined by 107 BCF -- a 180 BCF week-on-week decline. But the market’s attention appears fixated on the fallout stemming from the latest polar vortex and potential for below-normal temperatures into February. Our latest outlook already shows a U.S. storage carryout of less than 1.3 TCF assuming normal GWHDDs during February and March. Given the threat of additional cold weather, NYMEX gas futures are likely to see continued support until more concrete signs of a sustained weather reprieve are seen.
The latest EIA update on U.S. storage indicated inventories declined by 107 BCF -- a 180 BCF week-on-week decline. But the market’s attention appears fixated on the fallout stemming from the latest polar vortex and potential for below-normal temperatures into February. Our latest outlook already shows a U.S. storage carryout of less than 1.3 TCF assuming normal GWHDDs during February and March. Given the threat of additional cold weather, NYMEX gas futures are likely to see continued support until more concrete signs of a sustained weather reprieve are seen.
Spanish Gas demand is on a downward slope
Underlying Spanish gas demand is on a downward slope again. While it may not mean a lot for NBP, it is significant for LNG trade in and around Europe. Up until now, the one country that needed to consume LNG in Europe was Spain because it did not have enough pipeline import capacity to rely solely on pipeline gas. What's interesting is that in January and February of 2014 scheduled flows on the Duran and Medgaz pipelines are higher than what is widely considered each pipeline's capacity. Based on these scheduled flows, we must then assume that pipeline import capacity is closer to 66-mmcm/d rather than 62-mmcm/d.
Underlying Spanish gas demand is on a downward slope again. While it may not mean a lot for NBP, it is significant for LNG trade in and around Europe. Up until now, the one country that needed to consume LNG in Europe was Spain because it did not have enough pipeline import capacity to rely solely on pipeline gas. What's interesting is that in January and February of 2014 scheduled flows on the Duran and Medgaz pipelines are higher than what is widely considered each pipeline's capacity. Based on these scheduled flows, we must then assume that pipeline import capacity is closer to 66-mmcm/d rather than 62-mmcm/d.
NYC-based PIRA Energy Group reports EC report on energy prices and costs reveals interesting dynamics for end-users. In the U.S., continued shocks of polar cold have jolted natural gas prices and drawn coal stocks to their lowest level since prior to the recession. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:
EC report on energy prices and costs reveals interesting dynamics for End-Users
During a week featuring several policy documents and announcements, the EC report on Energy prices and costs provided insights into the end-user price and demand developments. The report highlights huge ranges in end-user electricity prices not only across member states, but also within each market and sector. Additionally, the report hints at steep elasticity of industrial demand to prices, signaling significant demand destruction is occurring.
During a week featuring several policy documents and announcements, the EC report on Energy prices and costs provided insights into the end-user price and demand developments. The report highlights huge ranges in end-user electricity prices not only across member states, but also within each market and sector. Additionally, the report hints at steep elasticity of industrial demand to prices, signaling significant demand destruction is occurring.
U.S. Coal stockpile estimates
Continued shocks of polar cold have jolted natural gas prices and drawn coal stocks to their lowest level since prior to the recession. PIRA estimates that total U.S. electric power sector (EPS) coal inventories will approach 134 MMst by month end. This reflects 58 days of forward demand (versus 77 days one year ago).
Continued shocks of polar cold have jolted natural gas prices and drawn coal stocks to their lowest level since prior to the recession. PIRA estimates that total U.S. electric power sector (EPS) coal inventories will approach 134 MMst by month end. This reflects 58 days of forward demand (versus 77 days one year ago).
Chinese prepayment could help reduce Russian fas import price
Gazprom may reduce the price of gas sold to China in exchange for an advance payment of several billion dollars. China persistently demands lower prices. However, the idea of a prepayment seems to be perceived more positively. China repeatedly tested this scheme with Rosneft and it proved to be very effective
Gazprom may reduce the price of gas sold to China in exchange for an advance payment of several billion dollars. China persistently demands lower prices. However, the idea of a prepayment seems to be perceived more positively. China repeatedly tested this scheme with Rosneft and it proved to be very effective
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