Switched On Energy Security in Flux: Gas Faces 2025 Stress Test
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Jan 15, 2025 Fauziah Marzuki, BloombergNEF’s Global Head of Gas Markets, shares insights on the turbulent natural gas landscape as it heads for a critical test in 2025. She emphasizes how geopolitical shifts, like the impact of the Russia-Ukraine conflict, are affecting trade flows. The discussion highlights the surprising role of extreme weather in changing gas demand, driving unexpected price surges in summer. Fauziah also tackles the evolving LNG pricing landscape and the implications for global energy security amidst oversupply challenges.
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Weather's Impact on Gas Demand
- Gas market fundamentals are shifting from focusing solely on winter demand to considering summer heat waves and droughts.
- This shift is due to changing climate patterns and their impact on energy consumption.
Drought and Heatwave Impacts
- Hot summers increase gas demand for air conditioning, particularly in large gas-consuming markets.
- Droughts in hydropower-dependent regions lead to increased gas-powered electricity generation, impacting global gas prices.
Gas Market Opportunities
- The narrow price spread between Asian and European gas prices limits arbitrage opportunities.
- Long-term LNG contract prices, often linked to oil, are currently cheaper than spot market prices, creating potential for cargo resales.