SINGAPORE (Reuters) - Sharp falls in Asian coal and gas prices over the past six months are a reminder to oil markets on where prices could go in the absence of OPEC-led supply cuts or any pull-back in U.S. sanctions, analysts said.
Benchmark coal and liquefied natural gas (LNG) prices in Asia have slumped amid healthy supply and only tepid demand, leaving some producers struggling to find a home for their products.
The LNG spot price has more than halved since September, while Australian Newcastle spot coal prices have fallen by more than a quarter since August - taking both to their lowest since mid-2017.
GRAPHIC: Oil, gas & coal prices https://tmsnrt.rs/2HvS6g0
Oil prices also fell last year, but have rebounded by more than a quarter in 2019, supported by voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and U.S. sanctions against oil exporters Iran and Venezuela.
"The real difference is oil has a policeman in OPEC, which helps keep the market balanced. But OPEC's job would be difficult if it wasn't for sanctions," said Jeff Brown, President of energy consultancy FGE.
"Absent OPEC cuts and sanctions on Iran and Venezuela, supply could be 2-3 million barrels per day (bpd) higher. This would certainly pressure oil prices in a big way."
Coal supply "is not as tight as producers suggested in the middle of last year", Credit Suisse said in a March note, while Australian coal prices are being hit by restrictions or delays at Chinese ports.
LNG prices have been pulled down by "supply growth of 35 million tonnes per annum and a warm winter in Asia", said analysts at Bernstein Energy.
By comparison, crude oil benchmark Brent hit a four-month high on Tuesday at $68.20, and analysts say prices could rise towards $70 a barrel in current conditions.
GRAPHIC: Oil, gas & coal price performance https://tmsnrt.rs/2CuZjZw
However, they caution supply restrictions may be rolled back later this year as many OPEC members are keen to supply as much oil as they can.
OPEC and non-member producers such as Russia are worried they are losing market share to producers in the United States, where crude output has risen by more than 2 million barrels per day since early 2018.
The group, which is due to meet in June to discuss output policy, has assured markets its members will stick with output cuts through June, which should support prices in coming months, said Lukman Otunuga, analyst at futures brokerage FXTM.
However, it was "a tougher call trying to determine what will actually transpire" after June due to "conflicting messages from OPEC and non-OPEC heavyweights" about ongoing cuts, he said.
GRAPHIC: Russian, U.S. & Saudi crude oil production https://tmsnrt.rs/2EUHeFO
On sanctions, the United States has said it would support a revival of Venezuela's oil industry should there be a change of government in Caracas.
Washington is taking a harder stance against Iran, putting pressure on countries to reduce their purchases from Tehran. Still, it has granted sanctions waivers to those most reliant on Iranian oil and these will be reviewed in April.
Without OPEC intervention and U.S. sanctions "oil could look like the other markets," said FGE's Brown.
GRAPHIC: OPEC oil production https://tmsnrt.rs/2FiS2y3
(Reporting by Henning Gloystein; editing by Richard Pullin)
