We launch our first regular short-term outlook and provide detailed supply, demand and price analysis for the year ahead.
For the first time since 2009, Asian LNG spot prices trade at a discount to European spot prices, like the national balancing point.
Asian LNG spot prices will find temporary relief during summer with demand growth in the Pacific outpacing that of global supply. However, as new Australian LNG supply ramps up towards the end of the year, prices will come under further downward pressure, converging back to European spot prices, below US$7/mmbtu.
This summer, European spot prices will be sustained at around US$7/mmbtu by coal-to-gas switching potential in the UK, supported by an £18/tonne (US$27.7/tonne) carbon price uplift to be introduced in April.
However, from this summer, Russian oil indexed prices will be cheaper than European spot prices, making contract gas more attractive. The reduced demand for spot gas risks pulling spot prices below US$7/mmbtu from Q4 2015, despite coal-to-gas switching in the UK.
LNG price outlook: 12 months ahead (Q1 2015) [Subscription required]
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