Rising volumes of US LNG exports have boosted liquidity at traded gas markets, leading to greater price correlation of regional hubs and more integrated markets. Still, prices at the U.S. Henry Hub, Asia’s Japan/Korea LNG (JKM), and the UK National Balancing Point (NBP) show much less correlation than crude oil benchmarks.
The International Energy Agency (IEA) forecast global energy demand will fall 6% this year – seven times the decline after the 2008 global financial crisis. The impact of the coronavirus pandemic marks the biggest shock since the Second World War, with electricity demand down 2.5% in Q1-2020 though lockdown measures were in place for less than a month.
Aspiring to become climate-neutral by 2050, the German government is supporting clean hydrogen technologies both at home and as a future export success for the country’s engineering companies. “Green hydrogen is tomorrow’s oil,” the German research ministry noted, stressing the flexible energy carrier “opens up new markets.”
West Texas Intermediate (WTI), the U.S. benchmark oil price, has shed 16.12% in early trading today, extending Monday’s losses of nearly 25% as the pandemic erased about a third of global oil demand and storage fills up fast. Henry Hub spot gas price fell to $1.65/MMBtu, near parity to the British NBP.
Banks accelerate their exit from coal financing as the credit appeal of mining and coal power plants deteriorates amid faltering electricity demand during the pandemic. Japan’s Sumitomo Mitsui Banking Corp (SMBC) and Mizuho Financial Group head for the exit, followed by South Africa’s ABSA bank and Citi Group.