NWE at premium to JKM along curve in 2023 as European demand rises

Northwest Europe delivered LNG was at a premium to JKM, the benchmark price for spot LNG in Northeast Asia, across the forward curve throughout 2023, according to market participants Dec. 2.

Drivers include higher demand in Europe as colder weather sets in, coupled with high storage levels among utilities in Japan and South Korea and tempered consumption in China due to its zero-COVID policy, which has reduced industrial activity.

There have also been signs of weakened buying interest from other countries in Asia, weighing on market sentiment.

European gas storage is high as peak winter demand season begins, though that could quickly change with Russian pipeline flows remaining reduced.

A market source did not foresee Japanese buyers buying spot cargoes until at least March because they are mostly well prepared for this winter.

Spot demand will pick up only right before the summer peak season next year, according to another market participant.

Meanwhile in South Korea, a mild weather forecast for January and February has increased concerns about an oversupply of prompt cargoes.

The Platts DES Northwest Europe January derivative was assessed at $31.367/MMBtu Dec. 1, with the respective JKM derivative assessed at $30.716/MMBtu.

That premium was seen through November 2023, according to multiple market participants, though the premium is narrow beyond the prompt.

The Platts DES Northwest Europe LNG daily forward curve is assessed based on various factors including market intelligence received during the day, bids, offers and trades during Platts Market On Close assessment process, and movements in other destination markets.