BAKU, Azerbaijan, Nov.19
By Leman Zeynalova – Trend:
Natural gas spot prices are expected to continue bullish trend in 4Q 2021 on the anticipation of strong gas demand, as the global economy slowly heals from the impact of the COVID-19 pandemic, Trend reports with reference to the Gas Exporting Countries Forum (GECF).
“Gas and LNG spot prices are also expected to remain bullish until 1Q 2022. However, prices will be at the mercy of weather conditions. If we experience extremely cold temperatures similar to this year, we can expect significant price spikes during the winter 2021/2022. On the other hand, if we experience a mild winter, prices are expected to soften, but would still be relatively high,” the organization says in its latest report.
GECF analysts recall that gas and LNG spot prices were hit by the perfect storm in 2020, reaching unprecedented lows and converged below $2/MMBtu.
“An already mild 2019/2020 winter and lockdown measures due to the COVID-19 pandemic diminished gas demand. Prices in 2020 can be characterized by two distinct trends: a gradual decline in 1H and a quick rebound in 2H. The rebound was driven by robust consumer demand ahead of the winter season, easing of lockdown measures and supply constraints at several LNG facilities. Gas and LNG spot prices over the first nine months of 2021 have soared way above the lows of 2020, and even surpassed 2018 levels, favoured by supply/demand dynamics,” reads the report.
On the demand side, GECF notes that there was robust recovery due to an intense winter season, warmerthan-usual summer, global economic recovery, increased LNG imports particularly in China, South Korea and Brazil and record high EU carbon prices which increased coal-togas switching.
“In terms of supply, there was reduced supply coming to the market due to several different factors including outages at some LNG facilities, more planned and unplanned maintenance due to postponements from last year, congestion at the Panama Canal which delayed cargo deliveries during the winter, slower recovery in pipeline gas supply to Europe, feedgas supply issues from some existing suppliers and reduced US gas production due to the passing of Hurricanes Ida and Nicholas during the summer and very low European storage levels,” the report reads.
---
Follow the author on Twitter: @Lyaman_Zeyn