Europe competes for LNG supply
We highlighted in our last snapshot of 2021 that record European prices were finally driving a supply response from LNG. A less tight market in Asia (driven by mild weather & summer restocking) saw European gas hub prices rise to an astonishing 8 $/mmbtu premium over the Asian LNG price benchmark JKM. In response, a significant number of LNG cargos have been diverted (many already on the water) towards Europe, with likely record volumes to be imported this week.
A combination of additional LNG supply and warmer weather over the holiday period has seen TTF prices halving from the peak. It is not all rosy however. Russian supplies remain low, while JKM – TTF spreads have recovered to trade closer to flat in response for March, which while low by historical standards will reduce the likely volumes of LNG imports from current high levels going forward.