PIRA Energy Group’s Weekly Natural Gas, Power and Coal Market Recap for the Week Ending August 18th, 2013 Archivar Correos Antiguos Outlook 2013


New York, NY (PRWEB) August 21, 2013

NYC-based PIRA Energy Group believes that new Asian import capacity does not necessarily translate into new LNG demand. In the U.S., compared to the EIA?s Short-Term Energy Outlook, PIRA foresees a sharper decline in electric generation sector gas demand during the upcoming heating season. In Europe, the moderately bearish mood emerging in the broader European spot market is coming from a decreasing concern about the supply situation going forward. Specifically, PIRA?s analysis of natural gas market fundamentals has revealed the following:

*New Asian Import Capacity Does Not Necessarily Translate into New LNG Demand

New regasification terminal capacity additions between now and the end of 4Q will add up to 90-mmcm/d of import potential over 4Q of last year. Tepid demand from emerging Asia, where most of this capacity is being added in the coming months, will result in some of this capacity going unused, particularly in India. Underutilization is also expected for the balance of the year in China once its three planned terminals for this year begin ramping up.

*Heating Season Outlook: 2013-2014

Compared to the EIA?s Short-Term Energy Outlook, PIRA foresees a sharper decline in electric generation sector gas demand during the upcoming November-13 through March-14 heating season. Our outlook also sees U.S. dry gas production rising modestly faster than the EIA, but lower expected imports keep our total supply estimate below EIA?s. In sum, our steeper year-on-year demand decrease but smaller supply increase leads to about the same storage withdrawal during the heating season.

*European Supply Concerns Ease Despite Maintenance

The moderately bearish mood emerging in the broader European spot market is coming from a decreasing concern about the supply situation going forward. Starting in September and October, all major pipeline sources will begin to ramp up seasonal supply in line with weather-related gains. The ramp up will allow storage injectors to keep filling stocks at above normal levels, helped along by the fact that oil-indexed (contract) supply levels will remain high as long as winter spot prices are trading at or above contract gas levels.

NYC-based PIRA Energy Group reports that more plant closures are announced in Germany. In the U.S., July spot on-peak power prices were mixed with respect to June, with significant gains in the Northeast and some Midwest markets, and modest declines across the South.. Specifically, PIRA?s analysis of electricity and coal market fundamentals has revealed the following:

*More Plant Closures Announced in Germany

Financial results announced by power generators mirror PIRA’s concerns that forward wholesale prices have fallen to levels that are unsustainable in the medium-term, resulting in a spate of mothballing and plant closures. Firm closures of nuclear, coal, and lignite units in Germany are still relatively small compared to the large amount of superefficient coal new builds coming online through 2015. However, the future for many other plants is looking increasingly uncertain, given the current wholesale forward curve.

*The Short, Not-Very-Hot Summer

July spot on-peak power prices were mixed with respect to June, with significant gains in the Northeast and some Midwest markets, and modest declines across the South. Whereas July 2012 was warmer than normal over nearly all of the eastern US (with the exception of South Texas and Florida), most of the East experienced cooler than normal conditions on average this July with only New England and the Mid-Atlantic regions breaking ranks. PIRA estimates that eastern loads declined from the prior year. Based on average daily peak load data, weather-adjusted loads edged up. ERCOT loads declined, but were up on a weather-adjusted basis.

*Strong Asian Demand Providing Short-Term Support to Prices

Coal prices largely moved higher last week, with FOB Newcastle (Australia) prices rising by the largest extent, as strong electricity generation numbers in China bolstered the Pacific market outlook. A rise in oil pricing may have also had a hand in the overall upward move in coal pricing. API#2 (Northwest Europe) and API#4 (South Africa) experienced a slight uptick in prices last week, however longer-term pricing upside remains limited by abundant supply.

The information above is part of PIRA Energy Group’s weekly Energy Market Recap, which alerts readers to PIRA?s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Click here for additional information on PIRA?s global energy commodity market research services.

PIRA Energy Group

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