PIRA: dimming hope for Asian LNG demand growth this year

NYC-based PIRA Energy Group believes that the latest indicators emerging from Japan are no longer as positive as they were in the first quarter.

PIRA sees this as the death knell for any real hope of significant Asian demand growth this year.

In the U.S. the change in weather forecasts that took hold over the weekend has shifted expectations for the current month market to a more bullish demand outlook. While last week’s storage report caused the market to test lows in the $2.50s, the highs once more traded in the $2.90s. To be fair, however, this more constructive fundamentals landscape stems only from temporary factors. Weather forecasts have supported new highs for gas-fired EG for the 2015 injection to date, and maintenance-related activity continues to leave its mark on domestic production.

At PIRA’s London Seminar, gas presentations will focus in part on how LNG will play a larger role in European gas balances in the years to come. Right now LNG is playing the role of bearish threat without actually delivering the promised goods. NBP is keenly focused and almost stuck to the gas-coal switching price in the U.K., which on any given day remains in the 42-44p/th (€19.63-€20.57/MWh) zone. Limited demand growth and a storage deficit do not seem to be impetus enough to break out prices to the upside, as supply options appear to be too many in number and too sizable in volume.

 

Image: Osaka Gas

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