Natural Gas Market Update – August 2014

Having fallen for much of the year, wholesale gas prices in the United States and Europe have begun to edge up slightly since July. With the northern summer now coming to a close, mild weather should keep prices in check until the onset of colder winter conditions sees gas use increase.

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  • Having fallen for much of the year, wholesale gas prices in the United States and Europe have begun to edge up slightly since July. With the northern summer now coming to a close, mild weather should keep prices in check until the onset of colder winter conditions sees gas use increase.
  • LNG import prices for Japan, South Korea and China declined moderately in the June quarter, while sales volumes were mixed. South Korean demand fell on mild summer conditions while Japanese and Chinese demand increased. With Japanese nuclear reactors likely to remain idle into 2015, it is likely that strong import volumes will continue for the remainder of the year.
  • Eastern Australian wholesale spot prices declined in the June quarter while retail prices held steady. Although spot prices have declined, reports suggest that new long term contracts are being written at much higher prices than previously as producers look to receive netback world parity (see Need to Know, page 10) ahead of LNG export capacity coming online in Queensland.
  • The medium term outlook for international LNG prices remains clouded. While demand in East Asia remains strong, forthcoming LNG export capacity in Australia and other areas combined with strong US shale gas supplies could place downward pressure on prices.

For further analysis download the full report.