BAKU, Azerbaijan, Apr.21
By Leman Zeynalova – Trend:
Natural gas prices are forecast to remain close to current levels over the rest of 2021, Trend reports citing the World Bank.
“This implies that prices will average around one-third higher in 2021 compared to 2020, with steeper increases in European prices and a small decline in Japanese contract prices. Price differentials between the three benchmarks are expected to continue to shrink as a result of the growing availability of LNG.
Demand for both natural gas and coal is anticipated to increase slightly in 2021 in line with the economic recovery, driven by rising demand in Asia, while supply growth will remain modest, says WB.
The EIA expects flat natural gas production in the United States, while production elsewhere will rise as supply constraints ease.8 Both natural gas and coal prices are expected to broadly stabilize in 2022.
“As with oil, a key risk for both coal and natural gas forecasts is the evolution of the pandemic, which could have a significant impact on demand. Further increases in renewable energy will also likely dampen demand prospects for both coal and natural gas, with renewable energy increasingly the lowest-cost source of new electricity generation.
Natural gas prices have experienced sharp fluctuations over the past 12 months, with European prices reaching their lowest level on record, U.S. prices hitting a multi-decade low in 2020Q2, and imported prices in Japan reaching a 15-year low. The drop in prices was driven by the global economic recession, which led to a drop in natural gas demand of more than 2 percent (the largest decline on record), as well as abundant supplies of liquefied natural gas (LNG). However, all prices subsequently staged a rapid recovery on strong demand and supply outages, with the speed of the recovery the fastest on record,” said the World Bank.
---
Follow the author on Twitter: @Lyaman_Zeyn