DES Northwest Europe assessed at narrowest discount to TTF since April 28

Northwest Europe delivered LNG's discount to the inland Dutch TTF gas hub front-month price was at its narrowest level in three weeks May 18.

Market participants were eyeing the results of buy tenders from South Korea's Kogas and Argentina's IEASA for signals of price direction and demand interest in the Atlantic and Pacific.

With so many LNG cargoes shipped to Europe amid Russia's three-month-old war in Ukraine, the ability to land those cargoes at European import facilities became more challenging, helping push Platts DES Northwest Europe's discount to TTF to a record $10/MMBtu on May 9. As slots have opened up in Europe amid mild weather and signs that Asian demand may be returning, discounts heard by traders have narrowed, to $7.75/MMBtu May 18. That was the narrowest discount since April 28.

The dynamics could continue in the near term, depending on the tender results. Kogas' nine-cargo DES or FOB buy tender, which closed May 18, covers deliveries for July to March of next year. IEASA's 13-cargo DES or FOB buy tender, which closes May 23, covers deliveries for July to Bahia Blanca and Escobar.

"Spreads have come in quite a bit," an Atlantic-based trader said. "I assume NWE discounts will narrow, too."

Movements in inter-European gas hubs, including Britain's NBP, also have been a factor.

"NBP reacting to lower LNG arrivals plus Argentina massive tender," a second Atlantic-based trader said.

Platts assessed DES Northwest Europe for July at $21.918/MMBtu May 18, marking a day-on-day drop of 63.4 cents/MMBtu. The TTF July contract was assessed at $29.668/MMBtu May 18, down 88.4 cents/MMBtu on the day. Across the Atlantic, the Platts Gulf Coast Marker was assessed at $20.350/MMBtu May 18, down 90 cents/MMBtu on the day.

Congestion at the Panama Canal continued, with the maximum wait for unreserved LNG tankers reported by the Panama Canal Authority at 15 days northbound and seven days southbound May 18.

The pilots serving the channel that feeds Cheniere's Sabine Pass export terminal in Louisiana advised May 18 that traffic was suspended past Port Arthur because of a possible spill. It was not immediately clear whether and to what extent the disruption would affect LNG shipments. Utilization at the seven major US liquefaction terminals was near full capacity May 18, with total feedgas demand at around 12.85 Bcf/d, based on nominations for the morning cycle.