European, Asian Gas Prices to Slide Further in 2020: WoodMac
European and Asian prices are set to fall further in 2020, as Europe struggles to absorb extra LNG supply as it did last year, Wood Mackenzie wrote in a research note on January 13.
Increased LNG production in the US and Australia was met with lacklustre demand growth in the Asia-Pacific region in 2019, leading to spot volumes being sold at a discount at European terminals, the Edinburgh-based consultancy said.
“In 2020, Europe will again be called upon to save the day. However, unlike 2019, European gas inventory will start the year at record high levels,” WoodMac research director Robert Sims said. “Europe will thus need to rely even more on flexible supply, or increased demand creation from within the power sector, compared to last year. Both indicate an even lower TTF price for 2020 which in turn suggests lower spot price in Asia.”
TFF (Title Transfer Facility) is a virtual gas trading point in the Netherlands.
“However, ever-present is the risk to LNG supplies from Qatar should US-Iran tensions escalate in 2020 to a point of causing disruption to shipping through the Strait of Hormuz,” Sims added.