NYC-based PIRA Energy Group weekly gas report shows that Asia has room to grow this winter, but it is not a sure thing, while in the U.S., the overweight storage build offsets the prior week. In Europe, Turkey grows but is vulnerable to Ukrainian issues.
It’s a given that LNG balances will begin to tighten in the months ahead due to seasonal increases in consumption. The postponement of any nuclear restarts in Japan to sometime next year will keep the country’s buying pinned to the high side while increasingly under-utilized import terminals in China offer the potential for an immense swing in spot buying under the right weather or economic conditions. Whether Chinese buyers actually use these new import terminals to a greater extent is another question entirely and will hold the key to whether spot prices will trade at a premium to contract prices this winter.
The EIA’s overweight reported injection stands as a counterpoint to last week’s underweight surprise. With market estimates for both weeks centered on the low-to-mid 80s BCF area, each “missed” the consensus by similar margins — but in opposite directions.
Turkey is the one market in Europe where gas demand continues to grow. For 9 consecutive months, Turkish gas demand has grown, while no other portion of Europe shows any sign of growth save recent increases in the U.K. market tied to the loss of coal and nuclear units. Relevant to the current spot market in this regard is that Turkey is buying 26-mmcm/d above contract from Russia through its connection via Bulgaria, Romania, and Ukraine, as its other flows through the Black Sea (Bluestream) are nearly full. Therefore, the threat to Turkish supplies is greater than most assume.
Press Release, August 28, 2014