Despite supply outages in Norway and the U.S., natural gas and LNG prices are down 2%-3% on the week (of Feb. 4) due to weak demand in Europe and Asia.
In Europe, Title Transfer Facility (TTF) prices for March delivery fell 3.3% week-on-week to approximately $9 per million British thermal units (MMBtu) on Feb. 6, with Asian spot LNG prices down to $9.2 per MMBtu, erasing last week’s gains (week 5).
EuropeUnderground gas storage facilities in Europe are presently 68.6% full, lower by 3.8% to around 79 billion cubic meters (Bcm).
Average withdrawals from storage fell 7.4% on the week to approximately 500 million cubic meters per day (MMcmd), compared to 590 MMcmd in the same period last year.
LNG for delivery into Europe was trading 5.1% lower at approximately $8.35 per MMBtu on Feb. 6.
Saying that, LNG imports remain robust, with Europe importing 11.93 million tonnes (Mt) so far in 2024, compared to 12.04 Mt in 2022 and 11.84 Mt in 2023.
AsiaAsian spot LNG prices for March 2024 delivery fell 0.3% on the week, with derivatives for April delivery trading 2.8% lower at around $9.4 per MMBtu on Feb. 6.Fundamentals remain weak in Asia, with buying interest limited to southern Asian countries.
India’s Gujarat State Petroleum Corp. issued a tender for volumes from 19-23 March but ended up not awarding it after receiving offers below $10 per MMBtu.GAIL awarded a swap tender for 24 cargoes from Sabine Pass in the U.S. for delivery to India’s Dabhol and Dahej terminals.On Feb. 4, Bangladesh purchased three March delivery cargoes priced at under $10 per MMBtu via a buy-tender, while Thailand’s PTT is seeking a cargo for March 12-13 delivery.
U.S.Henry Hub prices for February delivery expired on Feb. 5 at $2.49 per MMBtu, with the prompt-month contract for March rolled over closer to $2 per MMBtu on Feb. 6-7.
The market continues to experience volatility due to the oversupply situation and a lack of demand upside catalysts.
Our estimate for February's U.S. dry gas production is that it will average 103.7 billion cubic feet per day (Bcfd), up 0.59% month-on-month, as production is expected to recover following winter storm Heather in mid-January.Temperatures have been mild in the early days of February, indicating domestic consumption is likely to remain tepid.
However, the 15-day forecast picked up three heating degree days (HDDs) recently, which provides some bullish sentiment.
Combined, U.S. LNG exports from week 1-5 in 2024 have remained high compared to previous years (Figure 2).
U.S. feedgas demand as of Feb. 4 declined to 13.3 Bcfd, primarily driven by lower volumes to Corpus Christi, Texas, and Freeport, Texas.
Corpus Christi LNG has also experienced lower feedgas supply in recent days, though the cause is uncertain. The facility’s feedgas levels were approximately 1.57 Bcfd on Feb. 2, 1.74 Bcfd on Feb. 3, and 1.28 Bcfd on Feb. 4, compared to around 2 Bcfd a week earlier, due to one of its 4.5 million tonnes per annum (Mtpa) trains ramping down on Feb. 1.
The month-long outage at one of Freeport’s 5 Mtpa trains is also likely to limit the supply of US LNG.
Masanori Odaka is a senior analyst with Rystad Energy.
