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by Dr Jack Sharples (Oxford Institute for Energy Studies and EGF Associate Researcher)
Mike Fulwood (Oxford Institute for Energy Studies)
We analyse the drivers behind ongoing price rally and offer an outlook for the coming winter. On the global LNG market, unexpected outages meant that growth in supply simply did not keep pace with the increase in demand. Given its role as the ‘balancing market’, European LNG imports declined. This combined with declines in European production and pipeline imports to open a supply gap that could only be met by withdrawals from storage. We conclude that with gas markets noticeably tighter, the ongoing price rally is driven by fundamentals, with an added ‘fear premium’ that the forthcoming winter could be as cold as that in 2020/21. If that proves to be the case, the current price levels will persist, and even rise, while a milder winter could see the market turn slightly more bearish. READ MORE.
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