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NATGAS
JKM prices break above the oil-indexed range for the first time since December amid tightening fundamentals ahead of the Asian cooling season, according to IEA analyst Greg Molnar.
- Asian buyers will have a greater incentive for upward oil-indexed contract nominations and current prices above $11-12/mmbtu might also deter some price sensitive buyers.
- JKM prices rose more than 60% since early March, driven by strong Asia demand growth, tighter supply than expected and geopolitics.
- Double-digit gas demand growth in China and India is supported by industry and higher gas burn in the power sector while heatwaves are adding to the overall gas/LNG demand.
- Tighter supply fundamentals are driven by project delays, such as Tortue FLNG, and the uncertain fate of Arctic LNG 2 as well as unexpected outages, such as Wheatstone and Brunei.
- US LNG supply routes to Asia markets have been disrupted by geopolitical tensions near the Red Sea and droughts at Panama Canal, although water levels are improving.
- Upside risks also come from uncertainty surrounding Russian piped gas to Europe and ongoing Middle East tensions.
Source: IEA
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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