KUALA LUMPUR (Dec 6): BMI, a Fitch Solutions company, has forecast global natural gas consumption to rise in the near term as the Northern Hemisphere winter approaches, supported by strong demand for liquefied natural gas (LNG) across all markets.
In its Weekly Commodity Strategy note, it said global natural gas demand is expected to remain resilient, with forecast growth of 2.6% in 2025 following 2.3% growth in 2024.
“LNG will continue to drive new consumption, supported by rising export capacity and strong demand in Europe and Asia,” it said.
BMI said China’s LNG imports are projected to grow to 76 million tonnes per annum (mtpa) in 2024 and slightly increase to 76.2 mtpa in 2025. However, LNG trade between the US and China could face challenges if President-elect Donald Trump's administration adopts a more aggressive trade stance with China.
It said an early season example of the expected strong uptick in consumption has been seen in Europe with early season draws on storage exceeding the previously mild winters.
Colder than normal temperatures across Europe and low renewables generation (due to slack winds at key offshore wind farm areas) have forced greater use of natural gas for power and heating.
“If the current trend persists, we will end the season with a larger deficit of natural gas needed to restore storage levels ahead of the next year’s heating season,” it said.
In the short term, natural gas prices will remain supported by increased demand for heating during the 2024-2025 winter, but the high level of gas in storage may limit the extent of price surges.
Long-term forecasts indicate continued price growth from 2026 to 2028, averaging US$3.90 mmbtu, driven by the expanding US LNG sector and robust demand from the power sector.
“Potential delays in new LNG export terminal constructions and changes in natural gas production policies could affect these projections,” it explained.
Risks to the 2025 price forecast include potential weaker exports to Mexico and higher-than-expected domestic production due to improved market sentiment under the Trump administration.
Conversely, BMI said there are upside risks such as stronger-than-anticipated LNG export growth if European countries face a gas squeeze or a slower transition away from thermal power generation.
Overall, the natural gas market is expected to remain dynamic, influenced by various domestic and international factors.
Meanwhile, Brent crude oil prices had remained relatively well supported over the past week, with the front-month contract rangebound between US$71.80 per barrel and US$73.40 per barrel at market close.
The ceasefire between Hezbollah and Israel, which came into effect on Nov 27, is holding despite reported ceasefire violations and prices remain under pressure from the bearish news flow around the threat of new tariff measures from Trump.
“In line with our expectations, the group opted to roll over the cuts in their current form for another three months, with the scheduled hike in output now delayed until April 2025.
“While this decision will help to put a floor under prices, we believe substantial gains in Brent are unlikely, in light of the global market oversupply that we anticipate next year,” it added.
Although the cut extension meaningfully reduces the glut, BMI nevertheless sees the growth in supply outpacing the growth in demand by around 600,000 b/d.
“We are currently forecasting Brent crude to average at US$76 per barrel in 2025, down from around US$80 per barrel in 2024, but above the current spot price level of US$72.50 per barrel,” BMI said.
Uploaded by Lam Seng Fatt