ATLANTIC LNG: Key market indicators for March 4-8

While prices saw some support last week, the overall outlook for the Atlantic LNG remained weak for March and April until the injection season reignites.

In Asia, Platts, part of S&P Global Commodity Insights, assessed the April JKM at $8.327/MMBtu and the West India market at $8.05/MMBtu on March 1.

NWE, Med

Scarce support from demand was pressuring LNG prices across Europe and the Mediterranean on the week, with traders still uncertain over where the price floor would be. While specks of bullish news as the extended Freeport maintenance and traders closing their monthly books helped to lift prices last week, the overall bearish tone remains dominant across the Atlantic LNG market.

Platts assessed the DES Northwest Europe Marker for April at $7.774/MMBtu March 1, up 80.6 cents/MMBtu on the week.

Milder temperatures were also subduing demand from the heating sector in the Med. The West Med region welcomed healthy LNG imports to maintain supply. While the ongoing shipping constraints in the Red Sea was maintaining higher bids in the East Med for buyers to attract cargoes from alternate supply sources.

Although inventories remained higher year on year, traders still pointed to looming uncertainty for next winter, as well as the approaching summer season. For now, high gas inventories and strong LNG imports have supported the bearish sentiment.

Gas storage levels in the EU fell 0.08% on the day to 62.12% full as of March 2, according to Aggregated Gas Storage Inventory data. Meanwhile, EU LNG inventories stood at 4.897 million cu m.

Gulf Coast marker

Platts assessed the FOB Gulf Coast Marker at $6.9/MMBtu Mar. 1, up by 37 cents/MMBtu on the week.

In the US, high inventories, and production, as well as low domestic and global demand have kept the bears of the market on the front lines. "There are some see able movements for H2 April and H1 May compared to other periods," one Atlantic-based trader said.

While US export demand could see support during the injection season, the market was seeing little price increase in the near-term. For now, the market continued to gage how US LNG export projects may be impacted.

US LNG exports in February stood at 7.76 million mt as of March 4, down from the 8.38 million mt seen last month, according to data from S&P Global LNG analytics. Of the total, 54% was delivered to Europe, while around 15% was delivered to Asia. US LNG exports currently stand at 680,000 mt in March.

In Brazil, "the development of new Brazilian FSRUs has finally made progress in early 2024, with three new vessels arriving in the last week," Leonardo Gomes, LNG analyst, and Domitille Lainey, associate director said.

"These terminals will add 44 MMcm/d of capacity, about half of the current operating regasification capacity in the country. The floating storage and regasification unit (FSRU) Energos Celsius, loaded with a cargo from Sabine Pass LNG via transshipment, arrived at the Barcarena terminal on February 22, and the terminal is now operational as of Feb. 29."

Platts assessed DES Brazil for deliveries 15-45 days forward at $7.874/MMBtu, or at a 10 cent/MMBtu premium to Northwest Europe.

LNG swaps

With ongoing uncertainty between now and next winter, traders have seen a flattish Northwest European forward curve.

Platts last assessed the April DES Northwest Europe derivative at $7.804/MMBtu, May at $7.902/MMBtu, June at $7.971/MMBtu and July at $7.984/MMBtu.

The spread between Winter/Summer NWE LNG price was seen narrower when compared to JKM. "Seasonal demand in Europe is diminishing as people became more confident on winter supply," said an LNG trader.

In the JKM market, Chinese and Indian buyers were more wary of prices which might widen the seasonal price spread, the trader said. However, for the European side, ample inventory levels had contributed an important part to make the season price difference narrowed.

Some market players have suggested that summer injections could be more front-loaded due to uncertainty, and that could provide support for the market.

"Also, some counterparties are stopping withdrawals to skip withdrawal/injection costs and try to balance the demand by prompt deliveries," an Atlantic-based trader said.