European LNG's discount to TTF near record amid tight regasification slot availability

European LNG's discount to the Dutch TTF natural gas hub front-month price has grown to its widest level since its early March record.

With so many LNG cargoes on the water heading to Europe as Russia's invasion of Ukraine enters its third month -- and demand for those cargoes having weakened due to factors including mild weather, strong wind output and rising gas inventories -- the ability to land all of those cargoes at European import facilities has become more challenging.

That, in turn, has helped cause Platts DES Northwest Europe's discount to TTF to weaken further. French, Spanish and British gas indexes also have been depressed in comparison with TTF, according to market participants. DES NWE is the delivered price of LNG into Northwest Europe.

"I think there is not any single slot available," an Atlantic-based trader said.

S&P Global Commodity Insights assessed Platts DES Northwest Europe for June at $23.789/MMBtu on April 26. The $6.800/MMBtu discount to the June TTF assessed price was the widest since the record $7.000/MMBtu that was hit on March 8.

The difference then was that European LNG prices were at their record high of $60.925/MMBtu. Since then, delivered prices have dropped off sharply, as large volumes of LNG cargoes were shipped to Europe amid fears that Russia's war in Ukraine, which began in late February, could disrupt flows of pipeline gas to Europe.

Traders have said they expected volatility in gas and LNG markets to continue amid the uncertain supply picture.

National Grid data shows an upward trend in LNG flows entering the UK over the past few months. A large portion of the volumes being shipped to Europe are coming from the US. Some three-quarters of Cheniere Energy's LNG cargo deliveries in the first quarter were to Europe. At the moment, the biggest US LNG exporter says it is the world's biggest supplier of LNG to Europe.

Despite having fallen in recent weeks, prices of delivered LNG to Europe are currently more than three times higher than a year ago. Market participants have worried about the impact persistently high prices would have on end-user demand for LNG.