BAKU, Azerbaijan, Sept.22
By Leman Zeynalova – Trend:
Natural gas prices will remain elevated for some time yet, Trend reports with reference to the UK-based Capital Economics research and consulting company.
“Globally, but particularly in Europe, stocks are at historic lows and will take some time to rebuild even if we are right and supply picks up. However, by Q2 2022, we think prices will be under sustained downward pressure. Current prices will incentivise supply, particularly in the US where shale operations can ramp up relatively quickly. They will probably also hasten approval of the Nordstream II pipeline from Russia to Germany,” the company said.
The analysts of Capital Economics believe that prevailing prices should also curb demand, although substitute fuels (mainly coal) have also experienced sharp price rises. “That said, the outlook for demand is highly uncertain as a key driver is the weather, where an unusually cold or mild winter would have an effect on gas prices.”
Demand and supply factors have contributed to a perfect storm for global natural gas prices, said the company.
“On the demand side, unseasonable weather and extreme weather events have led to longer periods of cooling and heating than is typical. And China’s rapid rebound from the pandemic has also boosted gas demand. On the supply side, US production and exports have been hit by extreme weather and the pandemic-related price collapse in 2020. There have been outages at several liquefied natural gas (LNG) plants and Russia seems to be limiting exports via Ukraine for political reasons. As a result, gas prices have soared. Since the start of Q2, the European (TTF) gas price has surged by 290 percent, Asia LNG spot prices are up 260 percent and US natural gas (Henry Hub) has nearly doubled.”
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