How will coronavirus affect gas prices?
Gas prices in Europe for 2020 are now forecast to fall more than previously expected, to below $4 per million British thermal units (MMBtu) on average, according revisions to January forecasts of Rystad Energy, an independent energy research and business intelligence company.
Forecasts for TTF prices in particular are cut to $3.95 per MMBtu, a drop of $1.61 or 29 percent from the company’s January forecast.
“Similarly, our price forecast for Asian Spot prices has been revised down to $4.63 per MMBtu for 2020, which represents a drop of $1.69 per MMBtu from our previous forecast,” said the company. “We also see US Henry Hub gas prices remaining below $2.5 per MMBtu for a protracted period as production continues to increase and infrastructure developments lag. Our estimate for 2020 is now revised down to $2.26 per MMBtu, a reduction of $0.29.”
Rystad Energy said that the low gas prices are a result both of the coronavirus-affected demand and of an oversupply of liquefied natural gas (LNG) this year.
“But what will happen with all this cheap gas? The low prices represent a major economic incentive to switch from coal-to-power generation to gas-fired electricity production. In Europe and in Asia, gas prices are at record low levels – significantly strengthening the economic argument for switching from coal to gas.”
Rystad Energy expects gas-for-power demand in Northwest Europe to increase around 6 percent this year from 2019.
There are limitations, though, says Carlos Torres-Diaz, Rystad Energy’s Head of Gas and Power Markets.
“Europe is reaching a limit on how large additional gas volumes it can take, as Russian volumes remain high, storages are full, and temperatures stay mild. Asian buyers should take advantage of the price slump to import higher volumes of a cheaper and less carbon-intensive fuel than coal,” Torres-Diaz says.
The outbreak in the Chinese city of Wuhan – which is an international transport hub – began at a fish market in late December 2019. The number of people killed by the disease is nearing 3,000. Over 82,000 people have been confirmed as infected.
Some sources claim the coronavirus outbreak started as early as November 2019. The symptoms include cough, headache, fatigue, fever, aching and difficulty breathing. It is primarily spread through airborne contact or contact with contaminated objects.
Chinese health authorities say that the majority of the people who have died were either elderly or had underlying health problems.
Aside from Mainland China, the cases of coronavirus spreading have also been confirmed in South Korea, Italy, Japan, Singapore, Hong Kong, Iran, Thailand, the US, Taiwan, Australia, Malaysia, Germany, Vietnam, the UAE, the UK, France, Macau, Canada, Philippines, India, Russia, Spain, Lebanon, Nepal, Cambodia, Israel, Belgium, Finland, Sweden, Egypt and Sri Lanka.