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What are the reasons behind the deviation of natural gas and oil prices?

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发表于 2018-8-30 16:43:53 | 显示全部楼层 |阅读模式
Until 10 years ago, natural gas prices in Europe were closely related to oil prices. At that time, natural gas transmission points and natural gas markets across Europe were highly fragmented. Natural gas and oil and petroleum derivatives competed for power generation. Most natural gas supplies were linked to oil prices.
Oil and gas prices vary
However, this summer, European natural gas prices did not follow the typical oil price trend. In contrast, European natural gas prices follow their own supply and demand and pricing logic, highlighting fundamental changes in European gas supply and markets. As natural gas competition from different producing countries becomes more intense, the natural gas market is no longer a local market.

Muqsit Ashraf, head of energy at Accenture Strategy, said that the natural gas market is moving toward globalization, and that natural gas transportation has become easier, but its relationship with oil has broken. Therefore, oil and gas are not competing relationships.

This summer, Brent crude oil prices have fallen several times since they briefly hit $80/barrel in May, and are currently about $76/barrel. In mid-July and mid-August, Brent crude oil prices fell to a low of $70/barrel. The reason behind this is that current concerns about trade wars have led people to worry about the health of the global economy and oil demand. Growth situation.

Oil market analyst John Kemp estimates that hedge funds and other fund managers are also closing long positions, and in the past 18 weeks they cut net long positions in crude oil and refined oil in 13 weeks. Hedge funds currently hold the smallest number of long-term oil product contracts in nearly a year.

On the other hand, natural gas prices in the UK soared to the highest levels in the summer. With the bull market in Europe's natural gas market for many years, higher-than-expected summer demand and tighter markets have pushed natural gas futures prices to their highest level in the supply crisis last winter.

The winter of 2017 is one of the coldest winters in Europe in the last decade, causing soaring demand for natural gas, and stocks of storage tanks in Europe have fallen below average.

In its first quarterly report on the European natural gas market, the European Commission said that the cold currents in late February and early March led to a record high natural gas use in the first quarter of 2018, and gas storage fell to 18% of capacity – well below average five. The level of the year.

According to the report, by the end of the winter, natural gas inventories in countries such as Belgium, France and the Netherlands have fallen below 10% of capacity. Demand for natural gas in the UK is strong, leading to strong demand for natural gas this winter.

Natural gas demand in Europe this spring and summer is still high. First, due to the low level of natural gas storage. Second, some other traditional gas supply countries in Europe have reduced supply due to certain problems or facility maintenance. In addition, European utilities are seeking more gas-fired power generation, so utility companies are more inclined to use gas-fired power generation and are less inclined to use coal that is densely populated and polluting.

Natural gas gains or greater in the coming months
Although Brent crude oil prices have been hovering around $75/barrel, European natural gas prices have followed the natural gas supply and demand logic and rebounded this summer. Analysts and traders expect that as winter approaches, natural gas prices will increase even more in the coming months.

Accraure analyst Ashraf said in an interview that after the development of natural gas hubs, natural gas trading and LNG imports and trade in the past 10 years, the share of oil-linked natural gas supplies in Europe has been from 2005. About 80% of the year is reduced to less than 30%.

Ashraf also said that in Europe, competition between various natural gas sources from all over the world has intensified. He added that pipeline gas in Russia and North Africa is competing with each other, while LNG in Qatar and Nigeria, and LNG from the US soon compete.

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