Higher demand for oil, natural gas, and coal due to colder than usual winter temperatures in many parts of the northern hemisphere is driving up the regional prices and international benchmarks of all three fossil fuels at the start of 2021, according to oilprice.com.
Oil demand in rising in northeast Asia, where not only is the weather freezing, but China is increasingly using diesel generators amid a tight supply of electricity. China’s increase in oil demand has supported oil prices in recent days, analysts say.
“Winter weather is going to provide a huge boost to heating demand in the residential and commercial sectors,” Edmund Siau, a Singapore-based analyst at energy consultant FGE, told Bloomberg.
Thermal coal prices in Asia are also rallying, with Chinese prices surging due to tighter supply and industrial activity, according to Argus assessments.
Spot prices for liquefied natural gas (LNG) delivery in Asia jumped to a six-year high last month as lower-than-normal temperatures in key LNG importers and continued growth in China’s industrial activity boosted demand.
In Europe, the cold snap is also driving natural gas prices higher. Prices in Europe reached a two-year high earlier this week, and natural gas in storage is drawing down faster.