Baku, Azerbaijan, Apr. 27
By Elena Kosolapova - Trend:
Natural gas prices are projected to fall in 2016, according to the World Bank (WB) commodity markets' review.
The gas prices fall is led by large declines in Europe (38 percent decline to $4.2/mmbtu (million British thermal units)) and Japan (23 percent decline to $8.0/mmbtu) on continued weak demand and surplus supply, according to the review.
Gas prices in the US are expected to fall by four percent and average $2.5/mmbtu due to high stocks. However, strong growth in the power sector, rising exports, and slowing production growth are expected to underpin prices.
Risks to the forecast are mainly to the downside, given a global supply surplus and forthcoming increases in new LNG (liquefied natural gas) capacity, according to the WB's review.
Natural gas prices in the world fell 15 percent in the first quarter of 2016 amid weak demand and large stocks. European gas prices plunged 23 percent to $4.8/mmbtu on weak demand; gas has been too expensive to compete with coal in power generation. Gas delivered to Japan fell 11 percent to $8.0/mmbtu, owing to weak demand and strong seaborne supply from the Pacific and Atlantic Basins.
Spot cargoes of liquefied natural gas (LNG) flowing into Asia and Europe have collapsed to around $4/mmbtu because of excess supply.
---
Follow the author on Twitter: @E_Kosolapova