Global Natural Gas Prices Keep Falling as Demand Weakens

SEATTLE (Oil Monster): Global natural gas prices continued falling Monday, picking up where they left off last week amid warmer weather, ample supplies and turmoil in the banking sector that has weighed on commodities. 

In Europe, the May Title Transfer Facility (TTF) contract fell 13% last week. It gave up another 8% on Monday and closed at its lowest point since July 2021.

Several U.S. banks have failed and fears over the economic impact spread to Europe, where Credit Suisse is being taken over by rival UBS after years of missteps. The headwinds have dragged down oil, natural gas, metals and carbon markets worldwide. 

Winter also is coming to an end, and Europe’s scramble for gas over the last year that has driven the market has left the continent’s storage inventories at nearly 56% of capacity, up from the five-year average of 35%.

Storage inventories even built over the weekend in some European countries – the first injections since January. Those have offset stronger-than-normal pulls in France, where some LNG import terminals are blocked by labor strikes.

Three of the country’s four terminals remain offline because of work stoppages that are expected to end this week. France is the European Union’s largest liquefied natural gas importer. The strikes over pension reform have failed to move the European gas market since they started about two weeks ago.

“There is ample spare LNG import capacity in Europe, so the strikes do not constitute an impediment to receiving LNG in aggregate,” said Energy Aspects’ James Waddell, head of European Gas and Global LNG. He told NGI, however, that the strikes are impacting French gas hub prices as well as those in the UK, where cargoes are being diverted. 

Indeed, the UK’s National Balancing Point benchmark finished about $1/MMBtu below TTF on Monday. Continental Europe is taking advantage of the discount, with a surge in deliveries from the UK to Belgium on the Interconnector pipeline linking the two countries. 

Unseasonably mild weather is forecast for continental Europe and the southern part of the continent this week as well, according to Maxar’s Weather Desk. Cold is expected to return to some regions next week, mainly Scandinavia and the UK. 

In Asia, limited spot buying has helped prop up LNG prices in the region. The Japan-Korea Marker was assessed near $14/MMBtu as the week got underway, nearly $2 above TTF. 

Taiwan reportedly purchased at least 10 cargoes for delivery between May and March to capitalize on lower prices and boost energy supplies amid a drought. Australia also recently sold spot cargoes for the region, and South Korea was reportedly in the market as well. 

LNG vessel rates are currently near six-month lows. The spot market remains “stagnant,” said analysts at shipbrokers Fearnleys AS last week. Most pending requirements for vessels are six weeks out and in the Pacific Basin, where rates are higher.

“Presently, there is a surplus of prompt vessel availability compared to the requirements in the market, with vessels opening in the Atlantic still commanding lower spot rates than those in the Pacific,” Fearnleys said.

Courtesy: www.naturalgasintel.com