Summary
Forecast highlights
- Spot LNG prices in Northeast Asia were around $4.6/MMBtu in the middle of June, and are expected to rise slightly over the coming months. However, they will remain below contract prices.
- Europe’s hub prices increased at the start of the summer, with the NBP month-ahead around 33-34 p/th in the middle of June. Storage restocks and North Sea maintenance are supporting hub prices.
- The Henry Hub front-month futures price will be boosted by low summer injection rates and the slowing pace of gas production in the US. GGA expects the price to average $2.8/MMBtu during the summer.
- The gas-price differential between the Northwest Sumas pricing point in the US and the AECO Hub in Alberta will encourage gas exports from Canada into the western US. GGA expects gas exports via Sumas to increase by 8% in H1 2016.
- Spot LNG prices in Latin America are expected to remain below $8/MMBtu during winter in the southern hemisphere, weighed upon by mild weather forecasts and general weakness in Latin American LNG demand.
- The high cost of pipeline gas from Chile to Argentina means it will only be a viable option for Argentina during peak-demand periods.
- Higher spot LNG prices in the Middle East and Africa compared with other regions will encourage Australian and US cargoes to enter the region in coming months.
- Global oil prices will receive support in the coming months from ongoing supply disruptions in Nigeria, Libya and Venezuela. Falling tight oil production in the US will also be a bullish factor for oil prices. However, GGA expects the Brent crude front-month futures price to average around $46/bbl in 2016 as short-term supply disruptions dissipate.