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ATLANTIC LNG: Key market indicators Nov 20-24

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ATLANTIC LNG: Key market indicators Nov 20-24

  • Author
  • Aly Blakeway    Megan Gildea    Sakshi Jalan    Clio Ho    Barbara Fernandez-pita
  • Editor
  • Dan Lalor
  • Commodity
  • LNG Natural Gas

The Atlantic LNG market remained under pressure despite blips of buying interest beginning to surface as colder temperatures approach at the end of the month.

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Platts, part of S&P Global Commodity Insights, Nov. 20 assessed the January JKM at $17.638/MMBtu and the JKM Balance Month-Next Day derivatives at $17.80/MMBtu.

The West India market for January was assessed at $16.838 /MMBtu on Nov. 20.

NWE, Med

** With temperatures beginning to cool globally, the heating market was waiting for temperature shifts at the end of the month to act as a catalyst for demand. Prices have been weighed on by ample storage inventories and continued supply out of the US.

** The Platts DES Northwest Europe Marker for January was assessed at $13.815/MMBtu on Nov. 17, down 23.1 cents/MMBtu on the day. Northwest European prices saw a 7.8 cents/MMBtu rise week on week. The Mediterranean marker was assessed at a 5 cents/MMBtu discount to Northwest Europe and fell nearly in line with Northwest Europe on the week.

** European gas storage levels landed at 98.94% as of Nov. 18, down 0.52% week on week, according to Aggregated Gas Storage Inventory data. European LNG terminals were over-supplied and have been pressuring prices. Additionally full inventories and increasing production out of the US have been cushioning any price increase from expectations of cooler weather.

**Storages were still comfortably full, despite the ongoing withdrawals, however, sources were seeing buying activity beginning to pick up. The bearish sentiment should hold back any price spikes in the coming weeks and the high inventories may cap demand levels, but blips of buying interest were beginning to brew for December in both Europe and the Mediterranean on the expectations of heating demand returning.

Gulf Coast marker

** High storage levels and weak domestic demand in the US was shielding prices on the week. Platts assessed the FOB Gulf coast marker at $11.34/MMBtu Nov. 17, down 15 cents/MMBtu on the day and 27 cents/MMBtu on the week.

** Sources expect the colder forecasts in the US, Europe and Asia to provide a long-awaited uplift to prices by the end of the month. The renewed optimism for heating demand should help to support sentiment in the near-term. However, with the current climate remaining mild and demand growth still relatively subdued in Asia, prices have remained under pressure and any extra cargoes out of the US have been heard flowing to Europe in November and December.

** US LNG exports in November continued the exponential growth trend, nearly doubling on the week to 4.95 million, according to data from S&P Global. Around 40% of volumes were headed to Europe, 4% to Asia, 3% to South America and the rest yet to be nominated.

** The persistent Panama Canal delays and longer voyage times to Asia, as well as increased spot prices from taking these delayed routes, could deter US volumes into Asia as winter approaches. Sources said Asian prices will continue to outpace European in the near term. But the constraints on the Panama Canal, meant Europe could still have the price advantage and attract more cargoes this winter. Unless a cold spell persists in Asia, US LNG flows could continue to find a home in Europe until any bullish signals appear.

LNG swaps

** Specks of buying interest was still rising down the curve for Northwest Europe, while some sources suggest the current temperatures are subduing any buying interest in the coming weeks, others see increased activity for December. However, activity for January and February has slowed as the market waits to see how things develop into next month.

** In the NWE forward curve, full-month January was assessed at $13.985/MMBtu, while February 2024 and March 2024 were assessed at $14.115/MMBtu and $14.037/MMBtu, respectively.

** The Panama Canal delays have been constraining prices in Asia and making it difficult for the region to attract additional volumes out of the US.

** Arbitrage economics out of the US selling into Asia over Europe have improved since the start of the month. US economics selling to Asia over Europe are at the highest level they have been since Oct. 24. but Europe is still managing to attract most of the excess US volume. "Yes, lots and lots of LNG is heading to Europe in November and December," one source said. Analysts at S&P Global expected that trend to change should cold temperatures quickly develop in Asia in the coming days.