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SINGAPORE, Nov 17 (Reuters) – Oil and liquefied natural gas (LNG) prices could climb higher this winter as low inventories will not be able to cushion the market from supply disruption or demand shocks, a senior executive of energy trading group Vitol said on Wednesday.
Demand for oil, coal and natural gas have surged as the global economy reopens from COVID-19 restrictions, leading to price spikes and supply crunches that could threaten the recovery.
Oil demand, for example, has risen above 100 million barrels per day (bpd) despite the absence of 2 million bpd of jet fuel demand from long-distance flights, said Mike Muller, head of Asia for Vitol, which is a one of the world’s major LNG traders.
“Most people think about cold winters and it is true that the last winter in the northern Hemisphere reduced (LNG) inventories quite dramatically and there’s been a big and late replenishment going on with Russians,” he said.
Muller also said that climate change had led to lower rainfall in key catchment areas for hydroelectric dams, which has meant greater demand for fossil fuels.
“LNG prices are at levels nobody would have predicted.”
When asked if a prolonged cold winter in China or the northern hemisphere could lead to another upward price spike, Mueller said: “We can’t rule it out.”
LNG spot prices in Asia LNG-AS have more than doubled this year as strong global demand and the supply crunch in Europe boosted prices.
Muller also highlighted that global crude oil stocks are low.
“We’ve seen a very marked depletion in Chinese onshore inventories, which tells you that globally now we have very low stocks,” Muller said.
Reporting by Koustav Samanta, Mohi Narayan and Florence Tan; Editing by Tom Hogue and Jane Merriman
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(Adds quotes, details)SINGAPORE, Nov 17 (Reuters) – Oil and liquefied natural gas (LNG) prices could climb higher this winter as low inventories will not be able to cushion the market from supply disruption or demand shocks, a senior executive of energy trading group Vitol said on Wednesday.Demand for oil, coal and natural gas have surged as the global economy reopens from COVID-19 restrictions, leading to price spikes and supply crunches that could threaten the recovery.Oil demand, for example, has risen above 100 million barrels per day (bpd) despite the absence of 2 million bpd of jet fuel demand from long-distance flights, said Mike Muller, head of Asia for Vitol, which is a one of the world’s major LNG traders.“Most people think about cold winters and it is true that the last winter in the northern Hemisphere reduced (LNG) inventories quite dramatically and there’s been a big and late replenishment going on with Russians,” he said.Muller also said that climate change had led to lower rainfall in key catchment areas for hydroelectric dams, which has meant greater demand for fossil fuels.“LNG prices are at levels nobody would have predicted.”When asked if a prolonged cold winter in China or the northern hemisphere could lead to another upward price spike, Mueller said: “We can’t rule it out.”LNG spot prices in Asia LNG-AS have more than doubled this year as strong global demand and the supply crunch in Europe boosted prices.Muller also highlighted that global crude oil stocks are low.“We’ve seen a very marked depletion in Chinese onshore inventories, which tells you that globally now we have very low stocks,” Muller said.Reporting by Koustav Samanta, Mohi Narayan and Florence Tan; Editing by Tom Hogue and Jane Merrimanfor-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up