DES Northwest Europe LNG assessed at record $8.900/MMBtu discount to TTF gas hub

European LNG's discount to the Dutch TTF natural gas hub front-month price widened to a new record of $8.900/MMBtu on April 27.

The divergence between Atlantic LNG and gas markets comes amid a mismatch between supply, demand and available regasification slots.

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

"There was this whole oversupply issue maybe four or five years ago, when the US started up. Then you had COVID, and now you have this," said an Atlantic-based trader. "You will always get these periods when it diverges from the status quo, and then it comes back to historical trends. We're really in uncharted territory right now."

As reported by S&P Global Commodity Insights, Platts assessed DES Northwest Europe for June at $23.821/MMBtu on April 27. The $8.900/MMBtu discount to the June TTF assessed price exceeded the previous record of $7.000/MMBtu that was hit on March 8. In a sign of the divergence between gas and LNG, NWE was up 3.2 cents/MMBtu on the day, while TTF June was assessed up $2.132/MMBtu on the day.

The difference in early March 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 the 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 and demand picture.