[LNG MARKET ANALYSIS ] 1. LNG Market Analysis

Transcription

1 [LNG MARKET ANALYSIS ] 1 LNG Market Analysis LNG Market Analysis Volume: 20 th April 2018

2 LNG and Natural Gas Price Assessment 14 th 20 th April 2018 [LNG MARKET ANALYSIS ] 2 LNG Analysis Global LNG prices remained stable to bullish as summer season is approaching, supported by bullish crude prices and European gas pries supporting LNG prices due to lower inventory level across Europe & outages at Norwegian gas distribution network. Bearish factors are: Supply side remained adequate with resumption of cargoes from Papua New Guniea and Dominion Cove Point project along with regular cargoes from US and Russian projects plus weak domestic LNG prices in China. As per Liquefaction forecast model 86 vessels are expected to load from all the supply centres during next week. Asian price closures on Friday; NE Asia for June closed at $7.62/MMBTU, whereas July prices closed at $7.69/MMBTU, while long-term contract prices are in the range of $8.13/MMBTU-$9.75/MMBTU. Product receipt during last week, Japan received 1.59MMT (25 vessels), South Korea 0.77MMT (12 vessels), China 0.57MMT (9 vessels) and Taiwan 0.26MMT (4 vessels) during the week, NEA region represent 62.15% of a global trade this week. MTD April receipt: Japan 4.79MMT (77 vessels), South Korea 2.39MMT (34 vessels), China at 1.99MMT (30 vessels) & Taiwan 0.98MMT (15 vessels). DES South Asia is calculated around $7.43/MMBTU for June & $7.48/MMBTU for July, whereas FOB ME estimated at $6.99/MMBTU & $7.06/MMBTU for June & July 2018 respectively. Brent based contract price is around $8.62/MMBTU on average for Pakistan and Henry Hub based prices for India at $6.90/MMBTU.

3 [LNG MARKET ANALYSIS ] 3 India imported 0.55MMT (8 vessels), MTD 1.14MMT (17 vessels), while Pakistan received 0.06MMT (1 vessels) during the week, with MTD 0.49MMT (6 vessels). North West Europe LNG prices also had a stable run during the week due to lower gas inventory level along with reduced gas supply from Norway and bullish crude prices. NW Europe LNG price closure at $6.90/MMBTU for May and $6.82/MMBTU level for June. South West Europe prices remained stable low inventory level; summer demand and crude oil prices pushed the prices up. SW Europe LNG price closure for the week is estimated at $7.33/MMBTU for May and $7.16/MMBTU level for June. 6 vessels left from Russian projects with 4 from Sakhalin project for Japan, China, Taiwan & South Korea & 2 from Yamal for European destinations. Five cargoes left from Sabine Pass export terminal during the week for Asian destinations. France received 4, while Italy 3, Lithuania, Netherlands, Spain 1 each. Turkey received three cargoes during the week. Jordan received one cargo during the week. Mexico received two cargoes while Argentina and Chile received one cargo each during the week. Arbitrage window for European reloads for Asian destination remained closed this week. US Henry Hub based price is $5.66/MMBTU for US based liquefaction companies, which translate into margin of $0.59/MMBTU for NE Asia & $0.53/MMBTU for South Asia, whereas $0.67/MMBTU for NW Europe and $1.13/MMBTU for SW Europe. NEA May price around $7.62/MMBTU level is estimated to be 11.35% of Brent basis. Author s Conclusion Crude started on bearish node due to ease of geopolitical issues, however got support from non fundamentals news like fear of sanctions on Iran along US inventory numbers drop and bullish statement from KSA. Overall impact on LNG is supportive, as power generation sector will focus more on gas based power generation and buyers will focus ore on buying spot cargoes. Henry Hub prices still stable and HH based LNG prices still bringing positive margin for NE Asian, South Asian and European destinations. European gas prices supporting European LNG prices as bullish crude prices along with lower inventory level are the fundamentals driving the prices. LNG prices are stable as summer season is approaching along with support from European prices which is keeping the prices stable, supply fundamentals are suggesting adequate supply and demand needs to be picking up, we expect prices to remain stable in coming week, as bullish crude prices will entice spot buyers to be in the market. Market Analysis Supply Outlook (21 st -27 th April 2018) As per forecast model, supply seems adequate with 81 vessels expected to load cargoes. Project Name Cargoes Project Name Cargoes Project Name Cargoes Project Name Cargoes Sonartrach LNG 4 Qatar Gas 16 Gladstone LNG, AP LNG, QC 6 Atlantic LNG 3 Sakhalin LNG 3 Cheniere LNG 2 Curtis LNG Darwin LNG 2 Peru LNG 1 Yamal LNG 1 Cove Point LNG 2 Gorgon LNG 5 Angola LNG 2 Snohvit LNG 2 Brunei LNG 1 NWS LNG, Pluto LNG & Wheatstone LNG 6 Equatorial Guniea LNG ADNOC LNG 2 PNG LNG 2 Petronas LNG & PFLNG 10 Nigeria LNG 4 Oman LNG 1 Donggi Senoro LNG 2 Tangguh LNG & Bontang LNG 8 Total 86 1 Weather North West Europe: Weather remained mild to warm, and outlook is for cold weather after the weekend. South West Europe: Weather remained mild to warm, and outlook is for warm weather. South America: Warm weather with same outlook for next week. Middle East: Summers in Middle East. South Asia: Summer in full swing. North East Asia: Weather remained mild to warm, and outlook is for warm weather next week. South East Asia: Summer season.

4 [LNG MARKET ANALYSIS ] 4 North America: Summer in Mexico. US weather; Cold weather in Northwest, Rockies, Upper Midwest & Central, while warm weather in Southeast, South, Southwest and West, outlook is for same weather. Crude Oil Crude started on bearish note due to ease on Syrian tension, however prices has a rampant bullish run due to fear of supply disruption on possibility of Iranian sanctions and political issue in Venezuela along with drop in US inventories & Saudi Arabia expectations of higher crude prices. EIA reported 1.07 million barrels drawn down against expectation of 0.60 million barrels drawdown, while gasoline inventory reported a decrease of 2.97 million against market expectation of 0.22 million barrels draw down. Million Barrels (MBbl) 13-Apr Apr Mar Mar-2018 Production (MBbl/D) Exports (MBbl/D) Crude Inventory Gasoline Inventory US production stands at million barrels/day, increased by 15,000 barrels from last week. With inventory drawn down at Cushing by 1.1 million barrels from last week and stands at 34.9 million barrels. US weekly export number stands at million barrels, while imports decreased by 0.72 million barrels to 7.93 million barrels per day. Brent prices jumped by 1.4% from last Friday & closed at $73.66/BBL, while WTI closed at $68.26/BBL, increased by 1.29%, with Brent-WTI spread at $5.40/BBL on Friday. Future market closure on Friday for Brent front month at $73.66/BBL, with $73.01/BBL & $72.80/BBL for July & August, whereas WTI front month at $68.08/BBL with $67.87/BBL & $67.38/BBL for July & August respectively. Crude futures in long term still depicting backwardation due to concern of global over supply. Baker Hughes oil-rig count increased by 5 and now stands at 820. Natural Gas US Natural gas remained stable due to heating demand in North and Midwest along with air-conditioning based power generation in South despite the start of injection season. EIA reported working gas in storage is 1,299 BCF as of Friday, 13 th April 2018, net decrease of 36 BCF; against expectations of 18 BCF draw down. Overall supply remained reduced by 1.1 BCF to 85.3 BCF/Day, with demand also decreased substantially to 82.3 BCF/Day, with Industrial and residential sector demand by 7.2 BCF/Day while demand from power sectors increased by 0.4 BCF/day. Baker Hughes reported no change in gas rigs and total number stands at 192. Henry Hub closed at $2.75/MMBTU, with future market closed at $2.74/MMBTU for May, $2.77/MMBTU for June & $2.81/MMBTU for July, cooling season demand diving curve market. North West European gas hub Day ahead market remained mixed due to milder weather, reduced wind based power generation and lower gas flows due to planned and unplanned outages at Norwegian gas system. However forward prices remained bullish due to expected planned outages, bullish crude prices and lower inventory level. Gas flow from Norway reduced due to planned and unplanned outages at Karsto, Heimdal, Kollsnes fields along with St. Fergus terminals. Russian gas flows remained regular through out the week. Gas inventory level improving but still low in NW Europe with Belgium at 4%, Germany 19%, Netherlands at 13% & UK at 19%. UK Spot gas price closed at 53.43P/Thm ($7.16/MMBTU) on Friday, with front month April at 51.35P/Thm ($7.19/MMBTU). Dutch Spot price closed at 19.86/MWH ($7.16/MMBTU), whereas front month price closed at

5 [LNG MARKET ANALYSIS ] /MWH ($7.14/MMBTU. SW Europe gas hub prices Day Ahead prices remained stable to bearish as weather remained milder along with regular pipelined gas supply from Norway except for Southern France, where lower inventory level are keeping the prices bearish. SW Europe forward prices remained bullish on warm weather outlook, lower inventory gas inventory levels along with bullish crude prices. Spain hydro-based electricity generation increased to TWH from TWH last week, last year the number was at 8.15 TWH. French Day Ahead prices: Northern France gas prices closed at 19.79/MWH ($7.13/MMBTU) whereas Southern France gas prices closed at 20.07/MWH ($7.24/MMBTU). Italian gas prices closed at 21.72/MWH ($7.91/MMBTU) and Iberian Gas Day Ahead price at 19.93/8MWH ($87.91/MMBTU). Front month Northern France closure at 20.86/MWH ($7.15/MMBTU), while Southern France closed at 19.82/MWH ($7.52/MMBTU), Italian gas curve prices closed at 21.81/MWH ($7.87/MMBTU), whereas Iberian gas forward price at 20.39/MWH ($7.32/MMBTU). Weekly European Gas and LNG quantities at Storage and LNG terminals (BCF) One standard size Vessel of 150,000 m 3 equals to 3.42 BCF. Belgium France Germany Greece Italy Lithuania Netherlands Poland Portugal Spain UK Quantity in BCF 13- Apr Apr Mar Mar- 18 Gas LNG Total Capacity Utilization 4% 9% 5% 7% Gas LNG Total Capacity Utilization 7% 5% 4% 4% Gas LNG Total Capacity Utilization 19% 16% 15% 15% Gas LNG Total Capacity Utilization 81% 81% 82% 82% Gas LNG Total Capacity Utilization 39% 36% 35% 34% Gas LNG Total Capacity Utilization 72% 8% 26% 46% Gas LNG Total Capacity Utilization 13% 10% 7% 7% Gas LNG Total Capacity Utilization 38% 39% 37% 38% Gas LNG Total Capacity Utilization 39% 46% 45% 52% Gas LNG Total Capacity Utilization 46% 49% 47% 44% Gas LNG Total Capacity Utilization 19% 18% 18% 18%

6 LNG Trade Flows 14 th 20 th April 2018 LNG merchant data is developed in collaboration with Clipper Data LLC Supply Trade Flows 96 vessels carrying 6.36 million tons (305.8 BCF) left supply terminal centres. [LNG MARKET ANALYSIS ] 6 Demand Trade Flows 82 vessels carrying 5.17 million tons (247.2 BCF) reached demand centres. W-Country- within same country delivery & TBC To Be Communicated Disclaimer: This is a personal analysis based upon public information and should not be used for buying and selling of commodities. Source: EIA, REE & GIE.