Gas supply set to greatly outstretch demand

Unexplained low demand for gas in Asia is set to cause global oversupply which will push prices down to levels not seen in over a decade. Prices of gas in Asia are usually very closely linked to oil prices, which dropped by almost 50% in the final two quarters of 2014. When the oil prices fell, the gas prices followed suit which prompted experts to predict increased demand due to the low prices, however, the demand has not picked up.

Gas has started to struggle to compete with low coal prices and cheaper renewable energy in countries such as India and China, and with increased supply from shale gas in the USA and Australia, the price in only expected to decrease further over the next 5 years.

When oil prices fall to certain levels, it is left to OPEC to manipulate supply and drive up prices, however there is no industry body that has the market share to do this with gas. A positive note for the short term is that the low gas prices are expected to drive up demand in Europe, but with countries such as the United Kingdom expected to start fracking for shale gas, the demand may not last long.