Current natural gas market news: experts have assessed the consequences of increasing Russian gas supplies to China for Europe
All current natural gas market news today is centered around the Russian Federation. Russia is cutting gas supplies to Europe and at the same time increasing them to China. In Brussels, at least internally, they do not mind that Beijing is buying as much natural gas as possible from Moscow. The consulting firm Accenture Plc. says this is good for united Europe because it helps it fight the energy crisis.
Oil and gas market news: pipeline gas restrains Chinese demand for liquefied natural gas (LNG)
The reason is that Russian natural gas from pipes is holding back demand in China for liquefied natural gas (LNG), which Europeans are now looking for across the world to replace Russian gas, Bloomberg says, citing Accenture director Ohan Kose. Even though the Power of Siberia pipeline exports pipe gas from Russia to China is still a fraction of what Moscow was supplying to Europe until February 24, due to its low price, it is successfully replacing expensive LNG in the Chinese market. Also, new gas pipelines are being built from Russia to China.
“It’s important that Russian gas goes to China,” Kose said last week, “because it reduces China’s demand for LNG and its price.
If you follow global oil and gas market news, you know that China also imports gas through pipelines from Central Asia. Beijing is now trying to buy as much cheap pipeline gas as possible and as little expensive liquefied gas as possible. Because of the pandemic and coronavirus lockdowns and the resulting slowdown of the Chinese economy, Beijing has not yet even entered the spot gas market this year, where, incidentally, it was the main player last year. The appetite for LNG in China, according to forecasts by experts, may remain low not only in August, but also in September.
Current european natural gas market news
At the moment Europe is closely watching the epidemiological situation in the Celestial Empire and the way China is coming out of the blackouts and starts to restore its economy. Economists at Goldman Sachs explained in a research note last week that the less LNG China buys, the more Europe gets.
Accenture believes that if Russia stopped supplying gas to Europe completely, the price of gas could increase fivefold! Of course, this situation will last until spring. Kose is certain that the average price of gas next year will be lower than this year.
Gas consumption and demand is also being held back by the risk of a global economy sliding into recession. According to Accenture, the risk of a global recession would cut gas demand in the EU by 16% next year. Brussels is now persistently urging EU members to reduce gas consumption by 15% this winter. French energy company Engie SA, for example, reports that French residents have already begun to vigorously conserve electricity and reduce their gas consumption.
“The combination of lower demand in Europe and Asia and the fact that Russian gas has found new markets will lower gas prices in the medium term,” Kose forecasts. This is a positive for gas energy news. If the coming winter is harsher than the previous ones, high gas prices will certainly last longer, but they should decrease in the long run.
Analysts at U.S. bank Goldman Sachs revised its forecast on oil prices
Analysts at U.S. bank Goldman Sachs, one of the most optimistic forecasts about the cost of oil, changed its earlier forecast about the growth of oil prices to $100 in the next 12 months, Bloomberg said.
Now analysts predict that Brent crude oil will reach $94 per barrel in the next 12 months and $97 per barrel in the second half of 2024, the publication said.
The bank said oil prices have fallen despite rising demand in China, given pressure on the banking sector, recession fears and investor withdrawal.
“Historically, after such traumatic events, price adjustments and recoveries are only gradual,” the bank notes.
This week, the situation surrounding Swiss bank Credit Suisse triggered panic in the markets as oil plummeted to a 15-month low and Brent crude fell 12% to below $73 a barrel.
After the price decline, the bank expects OPEC producers to increase production only in the third quarter of 2024, contrary to Goldman’s forecast that it will happen in the second half of 2023. Analysts at the bank believe a barrel of Brent blend will reach $94 in the next 12 months and trade at $97 in the second half of 2024.
Bloomberg reported that the largest oil exporter, Saudi Arabia, announced higher April oil prices for markets in Asia and Europe.
Earlier, we reported that Iraq and OPEC advocated for guarantees of no fluctuations in oil prices.
Iraq and OPEC stood up for guarantees of no fluctuations in oil prices
Iraqi Prime Minister Mohammed al-Sudani and OPEC Secretary General Haysam al-Ghajs said coordination between oil-exporting countries is necessary to ensure that oil prices do not fluctuate in the market. the Iraqi government said in a statement on its website following the OPEC Secretary General’s visit to Baghdad.
“Oil-exporting countries need to coordinate their actions to avoid fluctuations in oil prices and their impact on both exporting and consuming countries,” the statement said.
Iraq is a founding member of the Organization of Petroleum Exporting Countries (OPEC). Also, Iraqi Oil Minister Hayyan Abdul Ghani said Sunday that the country intends to maintain the rate of oil production cuts of 220,000 barrels a day in line with its quota under the latest OPEC+ alliance agreement.
“We have committed some oil companies operating in the south to cut production to meet the agreed upon OPEC+ rates,” he said.
We previously reported that the price of Brent dropped below $75 per barrel for the first time in more than a year.
The price of Brent dropped below $75 per barrel for the first time in more than a year
The price of Brent dropped. Contracts for Brent crude oil to be delivered in May 2023 dipped below $75 per barrel in trading on March 15, Intercontinental Exchange data shows. Below that mark, the price fell for the first time in more than a year – since December 2021. At its lowest price, Brent was $74.04 per barrel, $3.41 (4.4%) less than at the close of trading on March 14 ($77.45 per barrel).
Brent is falling fast for the third day in a row. The price of fuel has fallen by $8.74 per barrel (10.56%) for three trading days: On March 10 trading ended at $82.78 per barrel, and on the weekend of March 11-12, the exchange was closed.
The turmoil affects the price of oil in the banking sector. Collapse of shares of Swiss bank Credit Suisse on the background of its problems and the refusal of the largest investor to inject new money worried world markets and overshadowed hopes for a recovery in oil demand in China, wrote Reuters. Also, three banks in the U.S. have gone bankrupt or closed since early March, including Silicon Valley Bank, which was the nation’s 16th-largest. It became the largest collapsed bank in the U.S. since the 2008 financial crisis. Investors fear a new crisis: The risk of a U.S. recession has intensified amid bank problems, Ole Hansen, head of commodity strategy at Saxo Bank, told Bloomberg.
A statement from the Saudi National Bank, which owns 9.9 percent of Credit Suisse, that it could not make new investments put an end to signs that Credit Suisse had just begun to stabilize, Reuters noted. “Fears of contagion [of the entire banking system] are gaining ground. As a result, the dollar is strengthening and securities are weakening – bad signs for oil,” said Tamas Varga, an analyst at oil brokerage PVM. “Credit Suisse and broader concerns about banks are negatively affecting sentiment. The outlook has suddenly become highly uncertain, and that’s hitting oil prices in the near-term,” said Craig Erlam, market analyst at brokerage OANDA.
The price of U.S. WTI crude fell below $69 a barrel: that hasn’t happened since late 2021 either, Bloomberg noted. The International Energy Agency also took a pessimistic stance in its monthly report and predicted that global oil supply will “comfortably” exceed demand in the first half of 2023, the agency wrote. There are growing concerns that more than 10 years of “easy money” with a sharp increase in key rates at the end “will not end well,” Bjarne Schildrup, senior natural resources analyst at SEB AB, told Bloomberg.
Earlier we reported that oil prices accelerated their fall, continuing the trend from the beginning of the week.
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