Natural gas, coal prices to remain at high levels through start of 2022

Oil&Gas Materials 22 October 2021 14:09 (UTC +04:00)

BAKU, Azerbaijan, Oct.22

By Leman Zeynalova – Trend:

Natural gas and coal prices are expected to remain at high levels through the start of 2022 but then decline as supply constraints ease and production increases, Trend reports with reference to the World Bank.

“However, additional bouts of price volatility remain a distinct possibility. European natural gas prices and Australian coal prices are forecast to each decline 14 percent in 2022 and then fall a further 27 percent and 25 percent, respectively, in 2023. In contrast, after doubling in 2021 natural gas prices in the United States are expected to see only a very small decline, given continued high demand for U.S. LNG exports. Asian delivered natural gas prices, which saw the smallest rise in 2021, are expected to see a relatively modest fall in 2022. Asian natural gas prices are primarily contract-based and are less susceptible to the volatility seen in spot prices,” reads the WB report.

The Bank notes that coal production is also expected to increase as some of the supply disruptions seen this year ease.

“China’s coal production is expected to rise in response to government efforts to raise output. Natural gas production is expected to rise in the United States, alongside the recovery in shale oil production, and the U.S. EIA forecast a 6 percent increase in U.S. LNG exports. Exports from Russia and Azerbaijan are also expected to rise, facilitated by new pipelines in the region. In the short-term, natural gas and coal markets remain particularly vulnerable to weather-related shocks. A particularly cold winter could see further price surges as both supply and demand are price inelastic in the short term. For example, unseasonably cold weather in Texas in the United States in February 2021 both reduced natural gas production and increased consumption, which resulted in U.S. natural gas prices temporarily doubling.”


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