Natural Gas Prices - Page 15

In 2014, the Brent price stood at $99/b, down by nearly $10/b compared to 2013 ($108.6). Of course, the major event of the year was the Brent’s plunge from $112/b in June to $62/b in December. The trend continued in January 2015: the Brent lost another $10 and reached $45/b. The reason for this downswing, over and above flagging economic growth and the dollar’s progression since June (-12% for the euro, worth $1.18 in January), is OPEC’s decision on November 27 to abandon the role of swing producer. OPEC aims to get producers of non-OPEC oil, LTO and high-cost unconventional oil to slow their increase in output to avoid a steady erosion of OPEC’s market share.

The NBP price stood at €23.7/MWh ($8.7/MBtu) in November, an increase of 8.7% in one month. This level is nearly 15% lower than that of November 2013. The uptrend has been favored by a seasonal increase in demand (even if only relative) and the decreases in Norwegian deliveries (incident at the Troll gas field).

The NBP price stood at €21.8/MWh ($8.1/MBtu) in October, an increase of 4.5% in one month. However, it stayed at a level that continues to be moderate, 17% lower than the price a year ago. The market remains relatively volatile (-5% to +4% compared to the average) influenced by factors such as the temperature, fluctuations in Norwegian deliveries and declarations related to the Russo-Ukrainian negotiations. For instance, on October 17 (+1.6%), the Russian president warned Europe about big transit risks for gas this winter, just before the October 21 negotiations with Ukraine (still ongoing on the 29^th). For now, the market is not anticipating a crisis. The projected winter price remains moderate, between €23.5 and 25.5/MWh ($8.7 and 9.4/MBtu) compared to €26/MWh ($10.3/MBtu) last winter. Actual trends will depend in particular on temperature (currently moderate) and deliveries from Russia. The range of “possibles” remains fairly broad, with Asian LNG providing a potential ceiling for the NBP price in the event of a crisis.