Gas prices recover due to rising demand in Asia
2023.01.17 08:53
Gas prices recover due to rising demand in Asia
By Ray Johnson
Budrigannews.com – Natural gas prices in Europe went up as there were signs that China’s economy might have bottomed and that a recovery might take supply away from the West.
After settling 14% lower on Monday, benchmark futures advanced as much as 4.6 percent. With a significant portion of the winter remaining and a brief cold wave moving through the region this week, the outlook for Chinese demand is crucial for Europe. Prices rose on Tuesday as a result of lower supply from Norway.
The speed with which China can recover from Covid restrictions will be the primary concern of traders. Even though economists had predicted a rise of 8.4% in 2021, the year before saw a 3% increase in GDP. Additionally, in the final quarter of the year, it exceeded expectations.
A quick economic recovery could boost consumption and increase competition for supplies with Europe, particularly if it also gets cold there. Full gas reserves are forcing some Chinese buyers to consider diverting LNG cargoes. In order to take advantage of the lower prices, additional Asian nations, such as India and Thailand, are also rapidly returning to the LNG market.
Rob Butler, a partner at Baker Botts LLP, stated in an interview, “China’s demand is definitely going to rebound, but whether it is going to reach the peak of 2021, there seems to be some doubt.” It is generally agreed that it will rebound, though probably not to the same heights as before.
China responded: Europe’s gas benchmark, which was at €57 per megawatt-hour at 8:49 a.m. in Amsterdam at the time, was 2.8% higher. On Monday, they fell to their lowest intraday level in 16 months.
More Joint EU gas purchases may begin by summer
