The Japan-Korea-Marker, an LNG benchmark price for spot cargoes, is set to strengthen relative to the Dutch Title Transfer Facility (TTF). This winter, South Korea is preparing to halt a substantial share of its coal-fired power generating capacity, boosting LNG demand which is set to propel up JKM contracts starting from November.
Over-the counter (OCT) traded gas volumes in European brokered markets amounted to 2,309 TWh in August, up 14% year-on-year. Trading at the Dutch Title Transfer Facility (TTF) rose 13.5% to 1,833 TWh, while German NCG contracts soared 25% to 125 TWh, according to the London Energy Brokers’ Association (Leba).
Though Europe’s green energy transition is gaining pace, natural gas demand is seen grow significantly. Wood Mackenzie advises European utilities to share some cross-hub price risk with LNG producers, or else they risk losing market space to international oil companies or state-run energy majors like Gazprom.
The U.S. shale revolution and falling capital costs for renewables are reshaping the power mix both domestically and abroad, the International Energy Agency (IEA) noted. Future production growth and exports will depend on the complementary build-out of oil and gas pipelines, as well as LNG terminals.
Drone strikes have reduced Saudi Arabia’s oil output by half which is feared to have reverberations on global energy markets. An increase in oil prices is likely to lead to a corresponding rise in gas and electricity prices, which will be reflected in higher tariffs for customers in the UK and most western economies.
Rising dry gas production in the United States will be sufficient to meet demand for power generation and exports at a lower price than forecast. With this assement, the U.S. Energy Administration (EIA) lowered its Henry Hub spot price forecast for 2020 by 20 cents to an average of $2.55 per million British thermal units (mmBtu).