PIRA: Japan’s decline in LNG consumption weakens Asian demand support

NYC-based PIRA Energy Group said that Japan’s four-year run of record breaking LNG buying and consumption in the wake of the March 2011 Fukushima crisis is coming to an end.

This could bring about destabilization of a key pillar of LNG demand support in Asia, PIRA said in its report.

In the United States, the 20 BCF week-on-week reduction in refills was largely explained by EG gas burns ramping up by ~2.5 BCF/D to an apparent ~36.4 BCF/D, a record setting weekly tally. PIRA foresees concerns over high storage, albeit mitigated by meager build, trumping weak production in terms of near-term price direction. When EG gas burns rapidly diminish in the weeks ahead, the offsets needed to balance the market will be fast-rising merchant stock building and/or lower prices to drive up EG gas demand.

PIRA added in its report that it expected too many risks to supply as well as a storage deficit in the third quarter in key support areas in Europe. Projected demand growth in power sector use and via weather changes year-on-year did not provide bullish sentiment, but bullish enough to avoid forecasting a massive sell off. Support for each of these areas has recently been shaken and warrants assessment as to their impact on the bigger picture.

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Image: Osaka Gas

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