PIRA: European spot prices continue to slide

NYC-based PIRA Energy Group said that the emerging slew of first-time LNG importers set to bring in cargoes beginning this month is actually one significantly bullish indicator for the market in an otherwise weak environment.

According to PIRA, the question is: How much if any, LNG will they actually import?

In the U.S., as winter’s chapter approaches its closure, it is increasingly apparent that little has occurred to arrest fears of a structurally oversupplied market.

Recent NYMEX trading suggests that the market is shifting its attention to the start of the injection season. As winter’s chapter approaches its closure, it is increasingly apparent that little has occurred to arrest fears of a structurally oversupplied market. Thus, prices look poised to remain under pressure as April/May will need to achieve extremely robust electric generation burns to curb the pace of injections heading ahead of summer.

In Europe, the recent slide in European spot prices is trending towards the PIRA forecast for March and the summer months. Assisting this slide will be the projected closure of several gas plants in Germany and the U.K. after several months of gains in aggregated gas use. The magnitude of the recent gains for gas-fired dispatching (and the spark spreads) in the U.K will face a number of headwinds in the months to come, ranging from the expected growth in renewable or decentralized generation, together with demand destruction.

PIRA Energy Group believes that Italian prices more aligned with continent, while gas stocks are being optimized more aggressively. In the U.S., the coal market moved notably lower again last week, with strength in the U.S. dollar coupled with weaker oil and gas prices providing much of the downside impetus.

Image: Dragon LNG