Natural gas shudders over continued Algeria violence

It Is Still Not Over

Earlier optimistic reports of hostages escaping from the Algerian gas facility changed into a more disturbing reality. Reuters reports that At least 22 foreign hostages were unaccounted for on Friday and their al-Qaeda-linked captors threatened to attack other energy installations after Algerian forces stormed a desert gas complex to free hundreds of captives, resulting in dozens of deaths.

The threat to their energy facilities is sending shivers across Europe as Algeria is the number three supplier of gas to Europe and a supplier of high quality sweet crude oil. Nat Gas prices soared across Europe in part because of frigid temperatures and the risk trade coming on. The Financial Times reported that “Algeria is the ninth-largest global gas producer and fifth-largest exporter, accounting for 11% of the European gas market. The gas is imported mainly through Spain and Italy, and the In Amenas field produces 9bn cubic meters of gas a year, accounting for about 2% of total European demand. The cost of UK natural gas for delivery in a month, seen as a leading indicator of European gas prices, rose as much as 4.4% after the initial attack on the gas plant. NBP natural gas for February was on Thursday trading at 68.29p a therm, after a hitting a high of 69.6p.”

The market is hoping that Russia will increase gas exports to help cover the loss. Still the threat by the terrorists to attack other energy facilities is putting risk premium in the European market and is added a bit to the bid for energy markets globally. While weather forecasts for Europe seem to suggest that their cold front may be ending, the threat to attack other energy installations should put energy facilities around the globe on high alert

Dow Jones reported that the International Energy Agency in its monthly report, the IEA raised its forecast for oil demand for 2013, citing expectations of higher demand from China, the world's second-largest oil consumer. However, this comes at a time when production from the Organization of the Petroleum Exporting Countries in December fell to its lowest level in a year, the IEA said.

That comes as Chinas GDP hit 7.9%, higher than the 7.8% expected.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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