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Natural Gas- Oversupplied For How Long?

May 17, 2011

Gas demand is showing unexpected signs of growth, and longer-term prices face more upside risk.

Gas demand from power is poised to climb 15% by 2016 to 22.9 Bcf/d, led by coal-to-gas switching, coal plant retirements and gas-fired capacity additions.

Demand from the residential, commercial, exports, transportation and other sectors also is rising.

Mexican exports are expected to average 0.3 Bcf/d higher in 2011, year over year. This is partly attributable to fewer LNG cargoes landing at Mexico’s terminals, but more to a fundamental shift in Mexico’s supply/demand balance.