Summer heat in the northern hemisphere and growing LNG demand could be kickstarting a mid-year price hike in global natural gas benchmarks.
Competition between Asian and European buyers has been heating up over the last two weeks, but healthy European Union (EU) storage levels and consistent liquefied natural gas volumes have mostly capped price gains.
Analysts with trading firm Energi Danmark said that could be changing, as key EU gas buyers expect to experience an uptick in demand over the next few weeks.
“For the first time this summer,” a stretch of warm weather is forecast over “Northern and Central Europe, and the expected increase in demand has a bullish effect on the gas market,” Energi Danmark analysts said in a report.
The September Dutch Title Transfer Facility rose more than 40 cents from the end of the week to above $11/MMBtu Monday. Asian spot LNG prices held the premium near the $12.50 mark.
Summer Heat
Maxar’s Weather Desk forecasts also have temperatures over central and southwestern Europe turning from warm to hot over the next two weeks. In Japan and South Korea, meanwhile, the mercury is expected to rise over the same period, with heat expected to be above the seasonal average for the rest of the month.
Despite rising prices in Europe, Rystad Energy’s senior analyst Masanori Odaka noted Asia is likely to continue dominating the market as Japanese utilities seek more volumes for August and September.
"Asia emerges as the preferred destination for U.S. LNG, fueled by increasing summer demand amid the ongoing heatwave,” Odaka said.
Outages at LNG terminals in the U.S. and Asia last week sank weekly trade volumes, but imports are forecast to rebound as demand and export capacity returns. Between July 29 and Aug. 2, weekly LNG imports are expected to reach 8.61 million metric tons (mmt), a 1.29 mmt increase week/week, according to predictive Kpler data. It would mark the highest weekly volume of LNG trade since late January.
The majority of cargoes delivered this week are expected to land in Asia, with imports growing to 5.57 mmt, according to Kpler data. European imports could also see moderate weekly growth to 1.75 mmt.
The LNG market was relatively quiet to start the week, aside from some sizable tenders from Asian and Southeast Asian buyers.
South Korea’s Posco International Corp. is seeking six cargoes between next April and August 2026. Indian power generator Torrent Power Ltd. launched a tender for 10 cargoes a year for 10 years, starting in 2027.
U.S. Feed Gas Ramps
Analysts with Energi Danmark noted that markets initially reacted to news of additional issues at Freeport LNG Development LP at the end of last week, but “any long-lasting uptrend” appeared to have subsided by Monday.
Wood Mackenzie forecast LNG feed gas demand to reach 12.9 Bcf Monday as volumes at Freeport LNG ramped up. Overall feed gas demand was expected to average 12 Bcf/d over the next seven days.
Feed gas nominations at Freeport LNG Monday reached the highest point since July 6, when the South Texas facility was preemptively idled to prepare for former Hurricane Bery’s impact on the coast. Flows were up to 80% of pipeline capacity, indicating all three trains could be operational, according to Wood Mackenzie pipeline data.
Early last week, nominations to Freeport had reached a mid-month high and ship loading had resumed when a reported power outage at the upstream pretreatment facility caused another facility-wide outage.
In U.S. development news, Golden Pass Pipeline LLC requested permission to ramp up its peak workforce at two of its compressor stations projects by 150 people. The firm, a joint venture between ExxonMobil and QatarEnergy, is working to complete portions of the pipeline intended to feed the Golden Pass LNG project southeast of Houston.
Golden Pass told the Federal Energy Regulatory Commission it needed 650 workers at its MP 33 and MP 69 compressor station sites in Texas and Louisiana until they are completed. In June, Golden Pass requested permission to place crews on a 24/7 schedule to address flooding and erosion issues at several of its compressor sites.
