Hot weather and maintenance work cutting into supplies pushed global natural gas prices higher on Monday.
The Dutch Title Transfer Facility in Europe gained about 3% on Monday, when it neared the $11/MMBtu level. Norwegian output has returned to normal levels of about 12 Bcf/d after volumes dropped roughly 20% last week following an unplanned outage at the Sleipner field that pushed prices to a six-month high.
“Surging gas prices across markets last Monday tell a story of vulnerability worldwide,” said Rystad Energy analyst Christoph Halser.
While the issue at Sleipner has been fixed, Norwegian grid operator Gassco AS reported another small outage impacting about 500 MMcf/d at the Visund field amid other heavy annual maintenance offshore of Norway.
European storage inventories are at 72% of capacity, compared with the previous five-year average of 60%. But the market remains sensitive to the slightest dip in output as it continues to go without Russian supplies.
Competition for LNG cargoes also continues to intensify as heatwaves are straining energy systems in parts of Asia.
Spot market activity in the region remains strong, with buyers in Japan, the Philippines, South Korea and Thailand all issuing purchase tenders over the last week for nearly 10 cargoes for delivery in July and August, according to Kpler. The Japan-Korea Marker is trading near $12/MMBtu.
Egypt is also reportedly in the market for up to 20 liquefied natural gas cargoes this summer as hotter weather in the country has forced it to suspend exports of the super-chilled fuel amid declining domestic output.
Shipbroker Fearnleys AS said in a note to clients last week that “heatwaves, maintenance and congestion are likely to have a rollercoaster impact on shipping.”
Vessel availability is balanced between both the Pacific and Atlantic basins given how narrow gas prices are in both regions. Ships are also avoiding the Suez Canal amid violence and geopolitical tensions in the region, while a limited number of slots are available to transit the Panama Canal.
In one positive for supply, Chevron Corp. restarted Train 2 last week at its Gorgon LNG export terminal in Australia. The train tripped offline early last week after it underwent repairs that took most of May to fix a mechanical fault.
Meanwhile, in the United States, a blanket of heat that has settled over the southern part of the country pushed Henry Hub to a five-month intraday high on Monday.
Even with forecasts showing milder conditions in the Midwest, Northeast and Ohio Valley for the next four days, heat from California to Texas should continue and eventually drive across the country, according to NatGasWeather.
“Either way, the pattern is hot enough for stronger-than-normal demand,” NatGasWeather said. That would allow natural gas storage surpluses to continue decreasing toward 450 Bcf “or a little under” by later this month.
The firm said production and LNG exports would continue to be closely watched this week.
Production estimates from Wood Mackenzie early Monday showed output at 99.4 Bcf, slipping from levels above 100 Bcf over the prior three days. LNG exports were at 12.5 Bcf, nearly unchanged from the seven-day average of 12.7 Bcf/d.
Maintenance work is also underway at Cheniere Energy Inc.’s Sabine Pass export terminal in Louisiana that is scheduled until June 16.
Elsewhere in the Atlantic Basin, Trinidad and Tobago’s Atlantic LNG has started 45 days of maintenance on its 5.2 million metric tons/year (mmty) Train 4.
In other news, South Korea last week announced the discovery of oil and natural gas offshore of the port city of Pohang. The government said estimated volumes in the field could provide four years of oil supplies and up to 29 years of natural gas supplies.
In Africa, BP plc said the floating production storage and offloading (FPSO) vessel for the first phase of its Greater Tortue Ahmeyim project has arrived at the final location offshore of Mauritania and Senegal.
The FPSO will process natural gas before sending it to a floating LNG vessel to be liquefied. The first phase of the project is expected to produce 2.3 mmty of LNG for over 20 years.
And in the United States, Glenfarne Energy Transition LLC’s Texas LNG project won a key tax abatement in Cameron County. The company said the tax break was a key part of advancing the 4 mmty project, which is expected to start construction later this year. However, the company has not yet reached a final investment decision.
