Northwest Europe’s front-month LNG price settled at a five-week low on Thursday on a more comfortable supply picture and expectations of renewed Russian pipeline flows, as Asian competition for the liquid fuel intensifies.
The landing price for LNG delivered ex-ship to northwest Europe in March settled at USD 13.96/MMbtu (EUR 45.61/MWh), its lowest since 17 January, according to Spark Commodities data.
The price has plummeted by almost USD 3 from its two-year high of USD 16.91/MMbtu on 10 February, tracking European hub prices.
The continent’s benchmark front-month TTF gas contract also settled yesterday at its lowest since 17 January, at EUR 47.49/MWh, amid milder weather forecasts, increased LNG supply, and expectations that gas storage targets will be relaxed and that flows from Russia could resume amid an ongoing diplomatic thaw with the US, participants said.
The EU could agree to relax storage targets by June, officials said on Thursday. Meanwhile, Europe is set to receive its highest weekly volume of LNG in nearly two months, according to Kpler data, as US exports climbed to a record high.
However, it was geopolitics that was driving the fall in prices, participants said. “The ratcheting up of pressure by the US on Ukraine to accept terms of a potential peace deal with Russia is also leading to expectations of a resumption of pipeline gas flows from Russia to Europe,” said Australia’s ANZ bank.
However, “while a declared joint target for a Ukraine peace deal may open the door for Russian gas, the feasibility of a quick return remains questionable,” said Rystad Energy gas and LNG senior analyst Christoph Halser in a note.
The shift in LNG trade toward Europe has tightened the Asian market, with prices there rising overnight for the first time this week. “North Asia LNG prices have been pushing higher this week as the availability of LNG cargoes falls,” ANZ said.
Asia’s LNG price for April in the JKM was last seen up by almost USD 0.14 at USD 14.25/MMbtu, narrowing the discount to the TTF to less than USD 0.30/MMbtu.
Colder weather could prop up Asian LNG prices, Montel reported on Thursday.
Source: Andres CALA, Montel
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