West Med LNG prices rally versus Dutch TTF amid increasing buyer competition

The LNG spread in the West Mediterranean firmed against the Dutch TTF pipeline natural gas price as increasing competition for LNG cargoes kept discounts tight, despite strengthening natural gas prices.

Platts, a part of S&P Global Commodity Insights, assessed the May Mediterranean LNG marker at $9.074/MMBtu on April 11, or a 16 cents/MMBtu discount to the Dutch TTF price -- the strongest the differential has been since it was assessed at a 3 cents/MMBtu premium on Aug. 14, 2023. The differential flipped to a 32 cents/MMBtu discount on Aug. 15.

Traders continue to see the bearish and bullish signals across Europe and the Mediterranean.

"Lots of people trying to buy for May and July... Prices are quite strong, [it is] related to the arbitrage to Asia and trying to attract cargoes to Europe [and the Med]," an LNG trader said.

Although pipeline gas supply remains healthy and gas traders suggest a bearish market, bullish spells were seen in LNG and natural gas prices across Europe and the Mediterranean. Cargoes being redirected away from the Mediterranean towards Asia have kept differentials narrow despite the recent natural gas and LNG price spikes.

Although volatility has persisted, Spanish buyers were heard still bidding at even narrower discounts to TTF which also supported PVB -- the Spanish gas hub -- prices.

Traders see buying interest for LNG cargoes remaining strong. While gas inventories remain healthy, several traders expect the LNG cargo market to balance and even tighten amid limited opportunities for buyers to replenish with volumes heading to Asia.

EU storages were at 61% of capacity as of April 10, up 0.13% on the day, according to Aggregated Gas Storage Inventory data. Inventories in Spain stood at 79.53% full, up 0.20% on the day.

Notably, France was 42.74% full, up 18% on the day and Portugal was 86.94% full, down 0.92% day on day.

LNG imports in April so far into the West Mediterranean -- Spain, Portugal and the south of France -- totaled 970,000 mt as of April 12, according to data from S&P Global Commodity Insights analysts.

This compared to the 760,000 mt over March 1-12, with traders expecting healthy buying interest to last over the May to July periods. Bids were seen in Spain for this period with traders expecting competition between buyers in the Mediterranean, Northwest Europe and Asia to intensify in the coming weeks.

Of the current April import volume, Spain received 540,000 mt followed by France at 310,000 mt and Portugal the remainder.

Furthermore in France, the latest data from Elengy showed that a total of 22 cargoes are set to be unloaded at its three LNG terminals in April. That is 15% higher than March when southern French terminals received 18 cargoes.