NWE, Med LNG premiums to US Henry Hub near 7-week high

LNG prices across Europe and the Mediterranean have climbed to a near seven-week high premium to US Henry Hub gas prices, boosting the region's attractiveness for US LNG cargoes.

Platts, part of S&P Global Commodity Insights, assessed the DES Northwest Europe Marker for April at $8.245/MMBtu March 15, up 36.4 cents on the day, while the East Mediterranean Marker was $8.495/MMBtu and the Mediterranean marker $8.145/MMBtu.

This put NWE at a $6.529/MMBtu premium versus Henry Hub, while the Med and East Med were at a $6.429/MMBtu and $6.779/MMBtu premiums respectively. All three premiums were at the highest levels seen since Jan. 31.

The elevated premium comes as the market preps for the upcoming injection season. Although prices have remained relatively weak over the past few weeks, a few bullish signals have given some upward momentum to European LNG and gas prices.

Slight support in Europe was being met with relatively weak price movements in the US. The overall gas dynamics in the US remain bearish. Although some cooler temperatures are forecast in the US, domestic consumption and production remain healthy and overall market sentiment is weak. Additionally, the market is eagerly awaiting the return of Freeport LNG's train which could provide some further downward pressure.

For now, European prices are climbing faster than those in the US which could help to bring some supplementary volumes in from the US.

US exports delivered in March stood at 4.53 million mt as of March 18, with around 1.52 million mt delivered to Europe, including the West and East Med regions, according to data from S&P Global.

US volumes to Europe and the Med in March were nearly 31% of the levels seen in the whole of February.

While traders expect US exports to Europe and the Med to remain healthy this month with exports already being eyed for April and May, they also see the arbitrage to Asia beginning to widen again. The arbitrage for selling US cargoes to Asia over Europe could pull more cargoes away from the Atlantic basin in the near term, sources said.