Natural Gas Hysteria and OPEC Forecasts

14 Eyl 2021

The start of the week has already passed as usual for the last weeks, accompanied by cries that everyone will freeze this winter and that we urgently need to snatch at least a little more gas at any price to fill the empty storage facilities.

Given such sentiments, there is nothing strange in the fact that gas prices continued to renew their multi-year highs, in general, no. Note that the cost of gas production has not changed radically and this is not the first such case in the history of gas. So, it is worth taking a closer look at the gas for sales. Maybe not right now, but the prospect is already painfully interesting. And most importantly, it is approximately clear what will happen and how. This refers to the mechanisms of market self-regulation, which will inevitably correct the current situation - the question is only in time.

So the news that Morgan Stanley is forecasting a rise in gas prices to $ 10 per million British thermal units in the next 6-9 months is rather a signal that it is already possible to sell, however paradoxical it may sound.

Moreover, the flywheel of the market mechanism has already spun. An old mothballed coal-fired cogeneration plant, West Burton A, has been launched in the UK. And uranium prices have risen by more than 30% in less than a month. And these are just the first bells.

But God bless him with gas, after all, this is a strategic deal and not for one month.

OPEC published its monthly oil market report yesterday. The cartel was quite optimistic about the outlook for demand in the oil market, raising its forecast by almost a million barrels of oil per day.

OPEC now expects oil demand in 2022 to be 100.83 million barrels per day, up 4.15 million barrels from 2021. The reason for this optimism is that an increase in vaccination rates will lead to control of the pandemic, which in turn will lead to a return of economic activity and mobility to pre-pandemic levels.

The main event of today, and all of this week, is perhaps the publication of data on consumer inflation in the United States. If (when) the data show a further rise in inflation, the markets may get scared and even panic, because in this case they may not like the results of the FOMC meeting next week at all. Actually, the results of last week showed that many are already fixing profits (5 days of Dow decline in a row), and the growth of new capital on the stock market has decreased by 54%.