LNG & Oil: Prices Coupling
Even though many natural gas markets are recording strong production increases (especially the US), there have been significant delays in production and delivery systems for liquified natural gas (LNG). This unfolding reality leads an analyst at Wood Mackenzie to believe LNG may begin trading at price parity or with a premium compared to oil in the years ahead. That means that new demand for natural gas for electricity generation or heating will be as expensive as wind power in markets that do not have increasing domestic/regional production.
This further globalization of energy markets helps to drive coal prices higher as an alternative. This past week, coal prices moved back toward July highs in key exporter South Africa and the European market. The energy markets are beginning to focus winter needs and whether supplies are ample for when fuel demand is highest, the Northern Hemisphere’s winter.
Have a great weekend, and we’ll see what energy and climate news comes our way over the next few days.