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Gas prices to remain linked to oil prices
Competition in gas supply markets leads to increasing choice for buyers and to increasing liquidity in gas wholesale markets in North-West Europe. Nonetheless, it is reasonable to expect that the traditionally observed medium-term link of gas prices to the price of oil will be sustained in coming years, not least as spot gas sold in wholesale markets largely originates from oil-indexed long-term gas import contracts. On the other hand daily gas spot prices vary significantly around the equivalent oil price. In particular, gas spot markets, unlike oil markets, exhibit seasonal patterns. Gas spot markets also respond sensitively to specific events that affect physical supply and demand, such as the outage of certain gas storages or pipelines.
Anaylsis to back up this market view and to illustrate the interaction of market fundamentals was presented by Dr. Christoph Riechmann, Director in the Frontier (Europe) Energy Practice at an open workshop hosted in The Hague by the Dutch competition authority, NMA, and Tilburg University. The analysis partly drew on recent Frontier studies for NMa.
Frontier's experience in market analysis combined with its market intelligence is applied on behalf of a wide range of clients including authorities, oil and gas producers, gas traders, pipeline operators, storage providers, operators of liquified natural gas (LNG) terminals, power producers and energy users.
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