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 The latest Eclipse Long Term PricePilot Forecast (covering the period 2011-2025) for UK natural gas prices will be published on 4th May 2010.
The main issues are around the commodity rather than the oil price in this edition. The GFC and drop in demand is calibrated around the globe (using monthly data), the US shale gas growth is projected along with the continued growth in LNG capacity in 2010. The result is a new projection of the size and duration (monthly granularity) of the Atlantic LNG bubble. This bubble has linked the UK and USA prices, and delinked them from oil related levels. European LTGSAs are being modified to meet the threat posed by the huge spread between EBP Index prices and traded gas prices. Will this be enough? How long will this continue? Does USA need LNG? When will Asia absorb the oversupply? Eclipse has modelling this monthly and has well supported views from a Global Demand Model, a Global LNG Model, a European Gas Model and a leading UK Gas and Power Model. Our price forecasts are made available as absolute prices and as oil neutral spreads. or more information contact John King on tel (+47) 951 27 880 or e-mail
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- The rapid increase and fall of oil and other commodity prices over the last year has made us rethink how we relate the oil link to our NBP forecast. We therefore have in this report focused on:
The long term contract price – the link between European short and long term prices indexed to oil Oil parity and LNG - implications for UK prices of LNG spot prices Oil Neutral Forecasting to strip out effect of oil prices to get a more robust forecast in a volatile oil environment. Oil neutralized history and forecast provides for interesting analysis.
As always the fundamentals and their analysis is a key input.
UK and Norway monthly supply & demand fundamentals Discussion of the volume option held in Europe on Norwegian gas LNG availability going forward The recent economic outlook has also made us focus more on scenarios related to demand stagnation in UK and Europe.
We have seen a lot of interest in the model and model approach and will therefore in the document and associated workshop include a section on methodology. There has also been a lot of interest in seasonality, the interaction with the forward curve and implications for storage.
Given the huge volatility in the oil market, we believe that the new approach of “Oil Neutral Spreads” will make the forecasts more robust and more reflective of the gas market fundamentals.
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