Despite multiple maintenance and outage events weighing on LNG supply and dwindling storage levels, European natural gas prices were cooling again while Asian buyers kept drawing cargoes.
After rising almost 7% starting on June 10, European gas prices began falling Friday (June 14), according to Mizuho Securities USA LLC. They were still well below Asian prices, which rose more than 2% to above $12/MMBtu.
Analysts with trading house Energy Danmark wrote “ongoing supply concerns” were stoking the Dutch Title Transfer Facility (TTF) contract for July, but the modest downturn did not mean the market has calmed its nerves.
“Supply concerns will remain the main topic on the market this week, where the market opens bullishly once again,” analysts wrote.
July TTF opened above $11 Monday morning and rose about 20 cents higher by midday before settling near the $10.75 mark.
European liquefied natural gas imports have been muted since late April, thanks to another mild winter across the continent ensuring countries exited winter with hefty storage inventories. ICIS noted that May was the first month in more than two years that combined pipeline flows and cargoes from Russia to Europe surpassed U.S. LNG imports.
That trend has been holding firm through most of early June. Of the more than 7.85 million metric tons (mmt) of LNG shipped globally last week, around 5.45 mmt landed in Asia, according to Kpler. European buyers received 1.46 mmt between June 10-16, about 0.40 mmt lower than the week prior.
Maxar’s Weather Desk forecast above average temperatures across southeastern Europe, while the central continent could see milder weather over the next 10 days. Overall, the weather outlook is creating a mixed bag on whether the continent would see an uptick in cooling demand.
European gas storage levels have remained above the five-year average since the beginning of the year, which “may cap upside to global gas prices across summer,” analytics firm Timera Energy wrote in a recent report. However, Europe’s cushion has been narrowing as increased Asian demand and domestic consumption have ticked up.
Competition in the LNG market is also rising elsewhere, as summer heat challenges electric grids across the world.
Egypt launched another tender for LNG to help meet energy demand during expected blistering heat this summer. State-owned Egyptian Natural Gas Holding Co. was accepting bids until June 26 for 17 cargoes from July to September.
Chevron Corp. also confirmed that the Wheatstone LNG facility in Australia was undergoing repairs after a recent outage that could last for the next several weeks. Gas supply was scheduled to return to the facility on June 27, according to Kpler.
In the United States, maintenance began on a compressor station supplying the Cove Point LNG facility in Maryland. Flows to the 5.2 mmt/year terminal was down about 17% Monday from the previous day, according to Bloomberg.
Wood Mackenzie estimated LNG feed gas demand in the United States would average around 12.5 Bcf/d over the coming seven days.
Areas of the Gulf Coast, where most U.S. LNG terminals are sited, could be in for severe storms by the middle of the week. AccuWeather was forecasting rain from Southeast Texas to Louisiana, with the area between Houston to Beaumont, TX, receiving eight to 12 inches by Friday.
