DES NWE LNG assessed at premium to Mediterranean for first time since December

The delivered price of LNG into Northwest Europe was assessed Feb. 16 at a premium to the delivered price of LNG into the Mediterranean for the first time in eight weeks as some Spanish volumes were heard to have been reloaded to the UK and more such activity was expected near term.

The dynamic suggests there may be less of a need for the fuel across the Iberian Peninsula at the moment.

Spanish balances had loosened thanks to strong LNG arrivals in January, which weighed on the PVB gas hub and may have opened up arbitrage for reloads to Northwest Europe, according to S&P Global Platts Analytics. Currently, Spanish gas for power demand is weaker because of strong wind, which is also weighing on PVB.

Platts assessed the DES Northwest Europe Marker for April at $22.246/MMBtu Feb. 16, a 5-cent premium to the DES Mediterranean Marker assessment at $22.196/MMBtu. NWE and MED had been flat since Dec. 24, when NWE was assessed at a 4-cent premium to MED. The last time NWE was assessed at a discount to MED was Dec. 14, at a 2.5-cent discount.

Some reloading was expected for the coming weeks, perhaps for optimization purposes, said an Atlantic-based trader.

"Several parties are long on shipping and are trying to employ their vessels," the trader said.

A reload from Spain to the UK was recently heard by a second Atlantic-based trader, who said the move was likely because of arbitrage.

Less than a week earlier, citing the further shipping distance to the Mediterranean, a third Atlantic-based trader said he saw NWE-delivered LNG at a slight discount to the Mediterranean.

"Egypt was having production issues in January, so unless they are producing more now, most of the Mediterranean is supplied from the West, so ships from the US, Trinidad, or Nigeria have to sail further to get to Italy/Greece/Turkey," the third trader said Feb. 10.

In a sign of how volatile and uncertain the market has been, a fourth trader said the same day that NWE was heard at a premium to the Mediterranean. That day, Platts assessed NWE and MED at parity based on the mixed market intelligence.