The aim of this paper is to analyse the supply market for natural gas as well as to describe factors that have an influence on the price of natural gas. A forecast of the price trend of natural gas in the upcoming months and a forecast for May 2022 will also be given in this paper.
Natural gas is a naturally occurring gas mixture that is formed deep beneath the earth’s surface and is primarily composed of methane. Alongside crude oil and coal, natural gas is one of the most important fossil fuels in the world. In fact, according to the International Energy Agency, natural gas is the third most important primary energy source in the world energy market with a share of 24 % of the world energy supply in 2020. Natural gas consumption is expected to stay high in 2030 and 2050 with an expected share of 23 %. Compared to other fossil fuels, natural gas has the lowest CO2 emissions and is an important energy source for households and industries. It is used for heating, electricity, or as a fuel for vehicles.
Table of Contents
1 Introduction
1.1 Research question
1.2 Research design
2 In-depth market analysis and characteristics
2.1 Market overview
2.2 Demand side and customers
2.3 Supply side and suppliers
2.4 Market environment
3 Price development and forecast
3.1 Analysis of price development
3.2 Price forecast
4 Conclusion
Research Objectives and Themes
The primary aim of this paper is to analyze the global and regional supply markets for natural gas, identify key drivers influencing price formation, and provide a price trend forecast for the upcoming months, specifically targeting May 2022.
- Regional market segmentation and natural gas characteristics
- Distinction between OECD and non-OECD demand trajectories
- Analysis of geopolitical tensions and their impact on supply security
- Evaluation of influential price drivers (Fracking, Economic cycles, CO2 taxation)
Excerpt from the Book
Factors that influence the price of natural gas
The three major factors on the demand side, which have an influence on the price of natural gas are the variations in temperature and weather depending on the season, the level of economic growth and the availability and price of other fuels. The winter period strongly influences the demand for natural gas in the residential and commercial sectors. For example, although the demand for natural gas recorded its largest decline in absolute terms in 2020 due to the pandemic, the percentage of decline is lower than initially estimated. This may be explained by lower-than-expected temperatures in the northern hemisphere. In fact, during the cold months, these sectors have much more recourse to heating, which drastically increases their consumption. As a result, the price of natural gas raises. When this cold spell is unexpected, the impact on price can be even greater, as it is almost impossible to be able to respond so quickly to such a short-term increase in demand.
The high temperatures, which can be found in summer, also play a role in the demand for natural gas. Indeed, in hot weather, it is usual to turn on the air conditioning in buildings. This increases the consumption of electricity, and consequently the demand for natural gas in the electric power sector. However, this summer consumption reduces the possibility of storing natural gas for winter usage. This would negatively affect the price of natural gas. For example, due to difficulties on the gas market since the start of the year, EU countries have had to tap into their reserves. Thus, in mid-September, the stock fill rate was only of 71 %, compared to the usual 86 % at this time. The rise in prices for consumers should therefore continue to be felt.
Summary of Chapters
1 Introduction: This chapter defines the research questions and outlines the analytical framework provided by the model of Gerhard Heß.
2 In-depth market analysis and characteristics: This section covers the global production landscape, consumer demand segments, supplier structures, and the five environmental factors affecting the market.
3 Price development and forecast: This chapter examines historical price trends and evaluates six key drivers to forecast future natural gas price developments.
4 Conclusion: The concluding chapter synthesizes the main findings and highlights the inherent unpredictability of the natural gas market due to volatile geopolitical and environmental factors.
Key Keywords
Natural gas, Supply chain management, Market analysis, Price forecast, OECD, Commodity trading, Fracking, Nord Stream 2, Energy transition, CO2 emissions, Geopolitical risk, Market liberalization, Demand side, Supply side, Price elasticity
Frequently Asked Questions
What is the core subject of this paper?
The paper focuses on the dynamics of the natural gas market, specifically analyzing the structural characteristics of supply and demand and their subsequent impact on price development.
What are the central themes covered?
The central themes include regional market segmentation, the role of energy suppliers, the distinction between OECD and non-OECD demand, and macro-environmental factors such as climate policy and geopolitical tensions.
What is the primary research goal?
The aim is to conduct an in-depth market research analysis using the model of Gerhard Heß to predict the price trend and forecast the market situation for May 2022.
Which methodology is applied?
The paper employs the analysis model proposed by Gerhard Heß, which categorizes external factors (Economic, Technological, Political, Socio-cultural, Ecological) into five distinct fields of research.
What does the main body address?
It addresses global production volumes, sector-specific consumption (industrial, residential, transport), the role of long-term contracts, and the impact of price drivers like fracking and the pandemic recovery.
Which keywords characterize this study?
The study is characterized by terms such as market liberalization, natural gas commodities, price elasticity, supply chain reliability, and geopolitics.
How does the pandemic affect the natural gas market?
The pandemic caused a short-term drop in demand and production, followed by a sharp recovery due to industrial growth, which has contributed to unprecedented price volatility.
What impact does the Russia-Ukraine conflict have on prices?
The conflict serves as a major geopolitical price driver, creating uncertainty regarding the commissioning of the Nord Stream 2 pipeline and potentially endangering supply security to Europe.
- Arbeit zitieren
- Anonym (Autor:in), 2022, Market research on natural gas, München, GRIN Verlag, https://www.grin.com/document/1277818
