PIRA Energy Group reports that Asian LNG demand heads toward summer peak buying. Mexican gas flows move to trade forefront. In Europe, the need for stronger injections remains.
Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:
Asian Demand Heads Toward Summer Peak Buying
Time is running out to secure last minute spot deals ahead of the Asian summer peak, and it appears that buyers with last minute requirements for July and August remain unruffled, particularly as Shell has just announced the end of a May 19 force majeure for Nigeria LNG and operators of Norway’s Snohvit announced that the plant will be shipping LNG again in the coming days. Asian spot price assessments for July are still hovering in place after gaining some strength in recent weeks on prolonged Nigerian shortfalls.
Mexican Flows Move to Trade Forefront
Until recently, near-term U.S. gas trade dynamics have centered on Canada. While a sizable deficit in eastern inventories, which supply Canadian demand centers, will impact net flows to the U.S., gas trade with Mexico now has moved to the forefront. Mexico’s sizable acquisitions of costly LNG spot cargoes further attest to its lack of gas supply. Incremental U.S. flows into Mexico barely scratch the surface of domestic supply deficits tied to declining production.
The Need for Stronger Injections Remains
It is clear from the European supply/demand balances that the call on gas supply will need to accelerate in the third quarter if gas storage levels are going to come anywhere near the five-year average or 2012 levels by the end of October.