NYC-based PIRA Energy Group believes that the New Year will be marked by a slowdown in the pace of the new supplies originally set to hit the market in 2015.
Competing pressure from even lower oil prices will only add to the start-up delays that have long been set in motion in Australia over labor, infrastructure costs and other issues.
PIRA’s Gas Flash from two weeks ago noted that ongoing NYMEX gas price weakness partly reflected skepticism among traders taking a “show me” attitude toward forecasts of extremely cold near-term weather. Now, consensus forecasts of such frigid conditions through midmonth have materialized. PIRA’s updated Reference Case assumes close to normal readings later in the month, which raises the overall January 2015 GWHDD tally to ~6% above the 10-year normal but still ~6% milder than a year ago. Last week’s report includes an update of PIRA’s Reference Case for 1Q15 and 2015 as a whole.
The market has finally and vigorously agreed with PIRA’s bearish portrayal of the European gas market over the past few months. While it took a bit longer than PIRA thought it would in the fourth quarter for spot prices to come down, they are now accelerating at a rate that is faster than it was expected. The most rapid rate of weakness is tied to three primary factors: lower oil prices, higher LNG supply, and warmer-than-normal weather in Northern Europe.
Press Release; Image: Statoil