PIRA Energy Group's Weekly Natural Gas, Power and Coal Market Recap for the Week Ending July 14th, 2013
New York, NY (PRWEB) July 17, 2013 -- NYC-based PIRA Energy Group believes that Japan conserves and limits LNG tightness. In the U.S., there is optimism for future supply prospects. In Europe, German stocks show a stronger build. Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:
*Japan Conserves and Limits LNG Tightness
The big question mark will be whether Japan will also continue to conserve as much as it has in recent months. Demand there has been weaker in recent months, but a warmer than normal August could shift that sentiment, particularly as the country looks to be preparing for another, possibly extended period of nuclear free power generation from mid September. PIRA remains open to the possibility that one or two smaller units outside of the key Tokyo/Osaka demand regions could be restarted by the end of the year.
*Optimism for Future Supply Prospects
The expanding size of recent U.S. technically recoverable resource (TRR) estimates unmistakably generates optimism for future supply prospects, giving powerful credence to a U.S. gas production upside that was unimaginable in pre-shale years. These estimates could still to prove to be overly conservative, due to the mix of improving technology as well as unexplored and publically undisclosed resources that seems likely to expand U.S. gas TRR estimates in the years ahead.
*German Stocks Show Stronger Build
Storage levels still remain below normal in most countries, although storage injections appear to be rising. Germany, in particular, is showing aggressive injections backed by higher flows out of Russia. PIRA's June-Oct. balance built an extra 25-mmcm/d year-on-year from Russia in order to meet injection needs through October, but in July we have seen exports shoot up. German storage injection estimates, is running at 110-mmcm/d in July, which is even above our somewhat bold forecast of 101-mmcm/d made prior to the month. Normal German injections are only 67-mmcmd and the previous monthly record was only 90-mmcm/d.
NYC-based PIRA Energy Group reports that Pacific Basin coal buying activity slows, adding greater pressure to curtail supply. In the U.S., U.S. coal pricing fell sharply. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:
*Pacific Basin Buying Activity slows, Adding Greater Pressure to Curtail Supply
Coal prices moved lower last week, with FOB Newcastle (Australia) prices again exhibiting more weakness that either API#2 (Northwest Europe) or API#4 (South Africa) in the prompt. 3Q13 FOB Newcastle prices were down sharply week-on-week as distressed cargoes pulled valuations lower. The oversupply in the Pacific Basin also weighed on Atlantic Basin pricing, although easing supply from the U.S., Russia, and potentially Colombia (from another labor strike) has made Atlantic Basin balances tighten relative to the Pacific.
*U.S. Coal Pricing Fell Sharply
U.S. coal pricing fell sharply this past month given the combined weight of lower international thermal and metallurgical coal prices, easing domestic natural gas prices, and a Presidential call for greenhouse gas regulations for existing coal-fired power plants. As a result, the financial pressures on coal producers have heightened resulting in additional coal production cut announcements. Coal inventories are falling given stronger burns, especially on the sub-bituminous side.
*Updated Medium-Term Outlook Released
The updated medium-term outlook by the French transmission system operator shows that the French generation capacity is set to increase overall, at least on a nominal basis, through the end of 2015, but a shift toward higher growth in intermittent supplies (wind, solar, other sources) is taking place, while the French system faces closures of flexible sources of generation (coal, gas, oil). Given the modest growth in demand, French net exports are expected to stay strong.
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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