New England winter gas prices surge as global LNG market tightens

Winter-season gas prices at Boston's Algonquin city-gates are up sharply over the past several trading sessions as the forwards market reacts to a recent surge in gas and LNG import prices in Europe.

On Dec. 20, Algonquin's January and February gas contracts settled at their highest yet this season, reaching $29.63 and $27.89/MMBtu, respectively, S&P Global Platts' most recent M2MS data showed.

Surging prices in New England's gas market, which has historically relied on LNG imports during the peak-winter heating season, comes as onshore gas and LNG import prices in Europe hit record highs.

At Europe's benchmark Dutch TTF hub, gas prices topped $59/MMBtu in Dec. 21 trading, marking the location's highest ever recorded settlement dating back to 2008. In Northwest Europe, prompt-month LNG import prices were also assessed at a record high on Dec. 21, topping $58/MMBtu, S&P Global Platts data showed.

In Europe, spot gas supply has tightened over the past week as unseasonably cold weather hits Russia, prompting a reduction in gas flows to Western Europe. As Russian suppliers gauge the country's own domestic demand requirements, they've kept recent pipeline nominations exclusively to within-day capacity auctions, leaving the European market on edge, S&P Global Platts reported previously.

Higher gas prices in Europe have also moved the needle on import prices in Northeast Asia. On Dec. 21, the Platts JKM was assessed at $44.19, up about $2.50/MMBtu on the day.

Steadily rising gas global prices likely signal another daily increase in winter forwards prices at Algonquin. At the time of publication, S&P Global Platts' M2MS forwards curves for Dec. 21 were not yet available.

New England market

Higher forwards prices in New England come amid a recent and precipitous drop in cash prices there.

On Dec. 21, spot prices at Algonquin city-gates were trading at just over $10/MMBtu – up about $2 on the day but down from levels above $38 to start the week, data from the Intercontinental Exchanged showed.

Short-term forecasts from Platts Analytics show New England gas demand picking up steam through the remainder of this week and into the holiday weekend in a likely bullish turn for the spot market.

So far this winter season, New England has received just a single cargo at the region's Everett LNG import terminal, which delivered the regasified equivalent of about 2.9 Bcf on Nov. 3.

From November to March last season, Everett received seven cargoes carrying 20.5 Bcf. During the 2019-2020 season, the terminal took nine cargoes carrying nearly 23.5 Bcf, Platts Analytics data shows.

An updated seasonal outlook from the US National Weather Service predicts a 40% to 60% chance for above-average temperatures in New England from January to March with the bearish longer-term outlook potentially calling into question the region's need for imported supply this winter.

Following the recent surge in forwards prices at Algonquin, though, it appears that New England gas traders are still keeping a close eye on the global markets as they likely prepare to compete in the global LNG arena for additional peak-season cargoes.