Question

1. During the first four months of 2020 the spot price of crude oil has collapsed, while the price of natural gas has remained relatively stable. In this question I want you to discuss the pattern of prices for natural gas, paying attention to these elements:

a) How important is international trade in natural gas, and what considerations influence international trade?

Answer 1

With the wake of Covid 19, the global level demand for import of crude oil saw an all time low , seeing a decline in prices to negative, which is a first in history. On the other hand , the natural gas prices saw a decline, not so great in fluctuations , which is almost close to stable.

The world is linked together in order to fulfill the demand for the fuel , as still majority of power generation is via non renewable resources primarily oil and gas. The fall of demand for natural gas and crude oil was hesitation for the nations to import , via global seelerslike UAE or USA etc. As a precautionary measure. This incidence showed the value world linkage as suppliers can only find market if the international trade is viable for their supplies. The prices for natural gas is varying from 2- 3.3 /MMbtu. The prices are seeing a rising trend now.

What happened in present times, the demand for crude oil feel dramatically, so much so that the owner companies had to pay the companies concession to store the Barrell of oil , hence shifting the price to negative, as producers had to pay in order to store their reserves. In a direct impact to this, the demand for natural gas was high as a substitute.the world will take some time in order to shift to alternatives for clean and less Costing energies, but for now , even though precautionary measures are being taken, the world is still dependent on the non_- renewable resources majorly oil and gas.

This is how the prices are linked and dependent on international trade.