The price differentials for natural gas around the world is creating some major arbitrage opportunities in the cash market and leading to significant distortions in the energy transportation and logistics market. The demand for nat gas is falling in Europe and rising in Asia. Japan has become a extremely large user given it has closed 48 of 50 nuclear power plants. The result is that that LNG tankers are in shortage as cargoes take the long voyage to Japan instead of Europe. Given some of the contracts in place, there are actually voyages to Europe with nat gas cargoes which are then subsequently sent onto Asia.
The differential between US nat gas and the UK and EU is above 2 times and the number for Japan is even higher at close to 4 times. There are only limited cargoes coming to the US. Given time, the US will be a exporter, and the balance of payments deficit will be eliminated. The nat gas bubble any do more to adjust balance of payments than any government policy.
No comments:
Post a Comment