ATLANTIC LNG: Key market indicators March 11-15

The overall tone of the Atlantic LNG market remains bearish ahead of the injection season, though some opportunistic buying has also surfaced, sparked by lower outright prices across worldwide.

In Asia, Platts, part of S&P Global Commodity Insights, assessed the April JKM at $8.802/MMBtu, with JKM May derivatives at $8.90/MMBtu March 11. The West India market for April was assessed at $8.50/MMBtu March 11.

NWE, Med

Prices in Europe firmed slightly on March 8, although they remained slightly lower on the week. However, trading sources say they expect volatility could still be a recurring theme in the near term.

Platts assessed the DES Northwest Europe Marker for April at $8.066/MMBtu March 8, up 10.4 cents/MMBtu on the day and 3.3 cents/MMBtu lower on the week.

In the Mediterranean, the eastern and western parts of the market saw further divergence, with attacks in the Red Sea pushing up premiums in the East Med, while depressed demand and healthy imports dragged down discounts in the West Med. As a result, Platts assessed the spread between the West and the East Med at a record high.

Turkish buyers were heard to be pricing flat to a 10 cents/MMBtu discount to TTF, given the current shipping constraints.

"There is also a risk to LNG demand in Greece owing to the cost of supplying regasified LNG to Balkan states," according to David Lewis, LNG analyst at S&P Global. "Further bullish pressure could be placed on the East Mediterranean if shipping constraints are not lifted in time for the start of the Alexandroupolis terminal and the ramp up of associated demand from the Balkan states."

Platts assessed the Mediterranean market at $7.207/MMBtu. The East Mediterranean market was assessed at $7.552/MMBtu. This put Med prices at a 10 cents/MMBtu discount to Northwest Europe and East Mediterranean at a 25 cents/MMBtu premium to Northwest Europe.

Traders reported some opportunistic buying interest amid lower LNG prices on the Atlantic side.

"[There was] plenty of demand immerse at a lower flat price now," one Atlantic-based LNG trader said. However, supply continues to dominate demand, with LNG imports and gas inventories remaining above historical levels. Gas storage levels in the EU fell 0.1% on the day and 1.4% on the week to 60.71% full as of March 9, according to Aggregated Gas Storage Inventory data. Meanwhile, EU LNG inventories fell 317,000 cu m on the week and stood at 4.580 million cu m.

Gulf Coast marker

Platts assessed the FOB Gulf Coast Marker at $7.42/MMBtu March 8, up by 16 cents/MMBtu on the day and 15 cents/MMBtu on the week.

High storage inventories as well as ample production have been limiting any significant price hikes for LNG in the US.

US LNG exports in March stood at 2.8 million mt as of March 11, up 2.12 million mt on the week, according to analyst data from S&P Global. Of the total, 29% was delivered to Europe, while around 16% was delivered to Asia.

In Brazil, "El Niño weather pattern is driving LNG import variability since late 2023... Three LNG cargoes were diverted from their original destinations to Brazil and 7.6 million cm/d were regasified during a heat wave in November 2023," analysts at S&P Global said. "The intensity and extent of El Niño weather effects may linger in 2024."

Platts assessed DES Brazil for delivery 15-45 days forward at $8.066/MMBtu, or at parity to Northwest Europe.

LNG swaps

Traders still cite a flattish curve across the Northwest European forward curve.

Platts last assessed the April DES Northwest Europe derivative at $8.066/MMBtu, with May at $8.100/MMBtu, June at $8.176/MMBtu and July at $8.217/MMBtu.

Market sources reported that the flattish intermonth structure in the NWE LNG market had made floating cargoes uneconomical. "Floating makes no sense right now," said an Atlantic-based trader.

Although economics have been worn away by shipping constraints, mixed sentiment surrounds arbitrage economics.

"[There are] a lot of cargoes expected to go east," said an Atlantic-based LNG trader.

"Asian offtakers were not worried about supply disruption but TTF spike," said an-Asia based LNG trader.