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Informist, Monday, Sep 9, 2024

 

NEW DELHI – Natural gas prices are likely to remain subdued in Oct-Dec amid strong output and storage surplus, Motilal Oswal said in a quarterly research report today. Subdued industrial demand, mild winter weather, and renewable energy-oriented policies are also weighing down prices, it added. 

 

"While late-summer heat might offer brief support, a significant price recovery is unlikely before winter," the report said. The demand for heating rises with the onset of winter, thereby increasing natural gas consumption. Key support remains at 170 rupees per/mmBtu, while major resistance is 215 rupees. "If prices break the 215 level, the bias could shift to positive, with an additional push from winter weather forecasts," the report said. 
 

Throughout this year, Europe has been the focus of the natural gas market, following last year's energy crisis stemming from reduced Russian gas imports, the report said. During Jul-Sep, European gas storage levels were replenished more quickly than anticipated, easing fears of a winter supply crunch, it added.  

 

By late September, storage levels in key European Union countries surpassed 90?pacity, due to increased natural gas imports and energy-saving measures introduced in the first half of the year, it added. Storage levels from September onwards are key indicators for winter pricing. As of Aug 23, US natural gas inventories were 7% up on year and 12.1?ove the 5-year seasonal average. 

 

Meanwhile, the demand for European gas remains under pressure amid a slow recovery from the energy crisis two years ago. Demand is expected to only modestly grow by 2% in 2024 and 2025, majorly driven by China and West Asia, the report said. "Consumption of natural gas in Europe has consistently decreased since mid-2022, driven by a combination of mild winter weather and government policies aimed at reducing natural gas consumption," the report said.   

 

However, the energy crisis is far from over, with potential supply disruptions and colder-than-expected winter posing significant risks. The core issue for gas producers has been the reduced consumption during recent winters. Since 2011, US winters have generally been warmer than average. Global heating has reduced gas consumption for heating in winter, the report said.  End

 

Reported by Afra Abubacker

Edited by Vidhi Verma

 

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