NYC-based PIRA Energy Group reports that the volume and number of portfolio contracts has rapidly proliferated since 2010.
Starting low and continuing to grow, the volume and number of portfolio contracts has rapidly proliferated since 2010 bringing with it a considerable amount of market liquidity that will only deepen with the current generation of new LNG supply that will be coming into the market through 2018, PIRA reports.
In the United States, PIRA’s late-April bullish price outlook hinged on the expectation that tighter summer gas balances would alleviate bearish pressures, especially from swollen PR storage. The market’s post-April price rally seems to at least partly reflect a similar bullish perception. But PIRA’s April forecast also raised concerns about the market’s ability to continue to absorb near record-high stock builds ahead of the summer. Despite EIA’s latest report, PIRA continues to foresee bearish pre-July HH price risks stemming from any sizable CDD shortfall and/or less price-driven coal-to-gas switching.
The role of Algerian gas in the European balances continues to deteriorate. Between losses tied to higher Algerian domestic gas demand and losses tied to lower European gas demand in Southern Europe, the precipitous fall off in flows to the North appears to be approaching the bottom of the cycle. Algeria has compensated, to some extent, by sending more LNG to South America and Asia in recent years, but with crude prices lower and spot LNG markets extremely soft amid rapidly growing new supplies, the Algerian LNG volume is poised to turn back in on the Atlantic Basin.
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Image: DSME