PIRA Energy Group's Weekly Natural Gas, Power and Coal Market Recap for the Week Ending July 7th, 2013

LNG Spot Supply Shortfall Pushes Asia Spot Price Gently, while German Solar Availability is Volatile

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PIRA Energy Group

PIRA Energy Group

Prices are nudging upwards and the continuation of the Nigeria LNG port blockade means the loss of up to 15 cargos and counting to offer a further boost.

New York, NY (PRWEB) July 10, 2013

NYC-based PIRA Energy Group reports that LNG spot supply shortfall pushes Asia spot price gently. In the U.S., weaker electric generation gas demand indicates a lower price path. In Europe, The facts on the ground do not support a major change in the shape of the forward curve for spot gas. Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:

*Spot Supply Shortfall Pushes Asia Spot Price, Gently

Prices are nudging upwards and the continuation of the Nigeria LNG port blockade means the loss of up to 15 cargos and counting to offer a further boost. The seasonal demand lull is still being felt in Asia, with buyers resisting higher priced spot offers, but the threat of warmer than normal temperatures could change that fairly quickly, particularly on growing spot supply shortages from Nigeria. Oil price strength is a given in the coming weeks, as a resolution to political unrest in Egypt doesn’t appear to be in the near term offing.

*Erratic Gas Production Behavior of Late

Beyond last Wednesday’s weekly natural gas storage report, the market remains focused on two components of U.S. gas fundamentals. The prior week’s reported injection underscored a deterioration of gas-fired electric generation relative to our prior forecast. But now, weaker electric generation gas demand indicates a lower price path, and last Wednesday’s results suggest at the least some positive demand impact from the recent gas price downturn. The erratic behavior of recent U.S. gas production is the second market dynamic getting special attention of late.

*RWE/Gazprom Ruling is Important but Gas Balances have Evolved

The facts on the ground do not support a major change in the shape of the forward curve for spot gas in face of the recent ruling in favor of RWE versus Gazprom over oil-indexed gas prices. Of course the ruling is highly significant to the balance sheets of many major buyers and to Gazprom, but the price of gas will not be radically altered by this ruling without greater diversification of gas supply.

NYC-based PIRA Energy Group reports that German solar availability is volatile. Coal prices largely turned positive last week. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:

*German Solar Availability Volatile

PIRA's European Daily Renewable Generation Forecasts have been enhanced to reflect additional conditions or factors that were not previously considered and that could impact the German solar daily availability. Yet, the day to day volatility associated with the real-time German solar output reported by the EEX is such that there may be considerable noise in the official reported output.

*Coal Prices Get a Boost

Coal prices largely turned positive last week, with China’s proposed ban on low-cv and high-sulfur coal seemingly off the table. API#2 (Northwest Europe) and API#4 (South Africa) gained the most ground in terms of prompt pricing, both posting modest gains. While most of the forward curve for FOB Newcastle (Australia) increased week-on-week, 3Q13 prices slipped. There have been more supply adjustments in the Atlantic Basin in the past several weeks, perhaps explaining the relative momentum of API#2 and API#4 relative to FOB Newcastle.

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Click here for additional information on PIRA’s global energy commodity market research services.

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