NYC-based PIRA Energy Group believes that the world’s largest LNG buyer and one of two bright spots in Asian demand, Japan, appears to be dimming and it’s a mere foreshadow of the cloudy outlook ahead for the world’s largest buyer.
In the United States, for the third consecutive injection season bidweek, bullish steam has been abruptly let out of the newly minted prompt-month contract. While the proverbial rubber hit the road with buyers perceiving more downside risk to price than otherwise, the fundamentals behind the reported injection, and what easily could be a record high build next week, stymied any renewed upward momentum, PIRA said in its report.
European storage levels are well below last year and the five-year average through the end of May, but it is not obvious from the price of spot gas in Europe. The air of calm in the European spot market demonstrates the core belief that ample supply options will be available in the months to come to meet the expected surge in gas demand for storage injections. Another reason the market is relatively unconcerned about storage levels is because gas demand projections, even at the winter peak, remain exceedingly low relative to the amount of storage capacity in the European market.
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Image: Osaka Gas