Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained!

imageCommodities48 minutes ago (Sep 23, 2021 04:00AM ET)

(C) Reuters. Citi Isn’t Ruling Out Natural Gas at $100 in a Frigid Winter

(Bloomberg) — Citigroup Inc. more than doubled its Asian and European natural gas forecasts for next quarter and said prices could surge to as high as $100 per million British thermal units in the event of a particularly cold winter.

Liquefied natural gas prices are skyrocketing as seasonally low European inventories, booming Chinese demand and supply constraints from Russia to Nigeria lead to a bidding war for the power generation feedstock before the northern hemisphere winter. Japan-Korea marker prices have jumped almost 50% so far this month to near $30 per mmBtu, while in Europe LNG is up around 40% to close to $25. Price gains in the U.S. have been more subdued.

Average prices next quarter will be moderately higher than current levels in Citi’s base case, the bank said in the note. However, there are likely to be price spikes and if unusually cold weather boosts demand and hurricanes in the U.S. Gulf of Mexico disrupt supplies, cargoes could trade in the $100 per mmBtu range, or $580 a barrel in oil-equivalent terms, it said.

See also: China Begins Winter Gas Buying Spree at the Worst Possible Time

“Global natural gas prices could continue to go parabolic in the coming weeks and months,” Citi analysts said in the note. “Strong demand and a lack of supply response have sharply tightened the market. Any surprise demand surge or supply disruptions could propel price further upward.”

The ripple effects from the surge in gas prices into other fuels also look wider than initially thought, Citi said. Switching to liquefied petroleum gas for heating will influence naphtha and gasoline, greater use of kerosene will affect jet fuel and diesel prices, while fuel oil will play a bigger role in electricity generation, it said. However the LNG rally will fade — prices could drop 70% by the third quarter of next year from this winter’s levels, the bank said.

(C)2021 Bloomberg L.P.

Citi Isn’t Ruling Out Natural Gas at $100 in a Frigid Winter

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Citi Isn’t Ruling Out Natural Gas at $100 in a Frigid Winter

Categories