Why is the gas market the lowest it's been in ten years?
It’s a notoriously volatile market with many variables to be considered, so it can be hard to predict where the gas industry is headed over a long period of time. However, in recent months, the gas market has seen a fall to the lowest it has been in over 10 years.
What has driven the gas market to its lowest in over a decade?
This is off the back of an oversupplied market due to high levels of Liquefied Natural Gas (LNG). LNG is natural gas extracted from fields that has been super-cooled down to liquid form for ease and safety of non-pressurised storage or transport via tanker ships.
Prices of LNG hit record lows last week, as Chinese buyers have turned away shipments due to the Coronavirus epidemic, forcing traders to search for alternative destinations for tankers. Europe is the likely destination, but with the continent’s storage stock also at unseasonably high levels, the oversupply may persist through 2020.
This could therefore continue into early summer, providing LNG supply stays high and the market remains free from any sharp demand spikes (e.g. if the remainder of winter stays mild).
What does this oversupply mean for customers?
For customers, this is extremely positive! It is a good time for renewals and new business as suppliers can pass on these low wholesale gas prices through lower customer rates.
For CNG customers, it is a great opportunity to make the most of our bespoke products, especially Blend and Extend. Our Blend and Extend offering allows us to offer the customer a new contract at a better price by ‘blending’ the gas that we have already purchased for their current contract with gas available now and extending their contract end date.