The US and Canada are expanding
Although there are indications that new LNG export projects from the United States and Canada are accelerating, it is difficult to forecast the supply and demand in the future due to fluctuating natural gas costs. The British Columbia provincial government has permitted the Lisims LNG plant to start the environmental assessment procedure in Canada.
The action came after approval for Cedar LNG, another project slated for Canada’s west coast. Both follow an encouraging development for Shell’s massive Kitimat project.
New LNG export sites are developing in the United States as well. Over the next five years, new LNG plants could be built at an estimated cost of $100 billion, as high LNG costs and the need for energy security are driving up long-term demand for LNG and contracts.
After Freeport LNG restarts operations, the US is expected to surpass Qatar and Australia as the top LNG producer in the world this year. The EIA claims that as a result of increased demand brought on by the reopening of the Freeport LNG export plant, US standard spot Henry Hub prices are expected to rise from their lows in February.
LNG could boom in north Africa
Announcing their entrance into Israel’s expanding energy market, BP and the state oil company of Abu Dhabi on Tuesday proposed to jointly buy 50% of Israeli offshore LNG company NewMed Energy for about $2 billion. A new joint company which is going to be “focused on gas development in international areas of mutual interest including the East Mediterranean.” According to a statement from BP and Abu Dhabi National Oil Company the company will be established as part of the agreement.
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Some of the best energy firms in the world have recently been attracted to the offshore basin that borders Egypt, Israel, Cyprus, and Lebanon and is wealthy in gas. More than 80% of Algeria’s natural gas exports go to Europe. It already ranks among the continent’s top producers of the good. Analysts, however, have quickly noted that Algeria’s ability to substitute Russian gas quantities is limited.
Gas is trading sideways after the winter
Natural gas futures seem to keep the trading radius between $2 and $3, holding for a few months now. The 200-day average is slowly starting to adjust itself to these levels, however still far above $5.
The bulls don’t have many bases to fight the bears, however, the short-term corrections keep them alive. We usually see the bounces to the $2.3 and $2.5 areas.
Bears, on the other hand, have had the upper hand for quite some time now. Short traders seem to struggle with the $2 support. It would probably take a lot to break this line, however, with winter behind us, we will see seasonal adjustments as well.
Natural gas futures 1D chart, source: tradingview.com, author’s analysis