Tuesday Charts – Sleeping Dragons, Waking Bears

Tuesday Charts – Sleeping Dragons, Waking Bears image

Tuesday Charts – Sleeping Dragons, Waking Bears

10/06/2015 | Author: Matt Smith

Let’s jump straight into this first edition of Tuesday charts for October, and one of my favorite energy topics: LNG. The below chart illustrates how Chinese LNG demand is slowing…just as a whole host of global capacity additions are underway. Chinese LNG imports are down 3.5% this year, having risen 10% last year. Meanwhile, total gas consumption has only grown by 2% in the first half half of the year, after seeing double-digit growth in recent years.

The onset of capacity additions in the coming years means that 25 million tons of LNG oversupply are set to hit the market by 2018…more than the total LNG volume that China imported last year.

China LNG

Next up: good news bears. Money managers boosted net short positions in natural gas last week by 26%, while bullish bets fell to a record low. This move has been sponsored by a number of factors: the latest monthly data from EIA shows that natural gas production reached a new record in July, while a warm October means we’re set to test the record level of storage set in November 2012 at 3,929 Bcf.

A cherry on top of this bearish scenario is the impending El Niño weather formation, which means natural gas demand should be 10% lower than last winter, according to WSI. Hark – waking bears, grrrr:

natgas bears

We switch to renewable power, and this graphic from IEA’s Medium Term Renewable Energy Report, just out. The key takeaway from the below is that due to a combination of various factors (including price competition, long-term contracts, strong resources), renewable power is dropping to palatable levels across various parts of the world.

Note how wind power is cheaper versus solar in the US, endorsing the expectation that wind will make up the largest share of the US generation mix by 2050.

renewable power

 

We switch back to China now, and how income is distributed across the various classes. Not only is there a huge shift over the next half a decade or so into the upper middle class, but a geographical shift is also underway: away from the coast and into inland cities.

China demographics

The IMF just cut its projection for global growth to 3.1% this year, from its previous expectation of 3.3%, driven by ongoing weakness from emerging markets. (


About The Author

Author Photo

Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.