BAKU, Azerbaijan, April 28. Natural gas prices are expected to decrease by 55-58 percent in 2023, Trend reports with reference to the World Bank’s Commodity Markets Outlook.
The report reveals that European benchmark price is set to drop by 53 percent from its 2022 average due to lower demand, above average inventories, and improved access to supply. The U.S. benchmark price will decrease by 58 percent in 2023, mainly because of increased domestic production.
As for 2024, the gas prices in Europe are forecast to decline by 11 percent year-on-year, assuming Europe embarks on investments in LNG importing facilities. U.S. prices are set to bounce back in 2024 as production growth slows and demand increases, including that for LNG exports. The Japan LNG benchmark price is expected to decrease by 2 percent in 2023 and fall by 11 percent in 2024, although spot-price imports will play an increasing role as long- term contracts expire.
The World Bank also lists the risks to the forecasted decline in natural gas prices. Among those risks are the China’s stronger than expected industrial recovery and further decline in Russia’s exports, which are going to have a bullish affect on prices. However, possible increase in the US LNG export capacity and continued coal use in Europe’s power sector may have a downward pressure on prices.
“The resulting higher demand for natural gas would trigger an increase in Chinese LNG imports, potentially leading to higher prices amid heightened global competition. This would be reinforced if Russia further reduced exports to Europe, which would require additional supply from other sources (LNG and piped gas). Meeting European demand—including gas required to fill storage facilities in the summer months—would be increasingly difficult under scenarios in which LNG or pipeline imports from Russia to the EU are blocked or significantly curtailed,” the report reads.
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