ATLANTIC LNG: Key market indicators Nov 27-Dec 1

Forecast colder temperatures provided some support for the Atlantic LNG market last week but milder weather set to return next month was a weight on prices.

Platts, part of S&P Global Commodity Insights, assessed the January JKM at $16.067/MMBtu and JKM balance-of-month-next day derivatives at $16.35/MMBtu on Nov. 27, from $17.638/MMBtu and $17.80/MMBtu, respectively a week earlier.

The West India market for January was assessed at $15.375/MMBtu on Nov. 27.
NWE, Med

** As temperatures began to cool, sources saw support brewing for Northwest European and Mediterranean prices as heating requirements began to surface.

** The Platts DES Northwest Europe Marker for January was assessed at $14.423/MMBtu on Nov. 24, up 13.5 cents on the day and 60.8 cents/MMBtu on the week. The Mediterranean marker was assessed at $14.323/MMBtu on Nov. 24, up 13.5 cents on the day and 55.8 cents/MMBtu on the week.

** European gas storage was 97.69% as of Nov. 25, down 1.25 percentage points week on week, according to Aggregated Gas Storage Inventory data. Sources saw net withdrawals picking up pace and were eyeing where any additional supply out of the US that would replenish the stocks would go.

**Although inventories remained high, the cooler temperatures forecast into next month have provided a boost to prices. Additionally, shipping logistics and delays at Panama Canal have also provided support to prices globally. In the Atlantic, the number of available spot vessels halved week on week, while they almost doubled in the Pacific. This may further support prices in the Atlantic, with the lack of available vessels still remaining persistently tight.
Gulf Coast marker

**Cooler temperatures in the US, Europe and Asia have helped to support prices week on week. Platts assessed the FOB Gulf coast marker at $11.79/MMBtu Nov. 24, up 10 cents/MMBtu on the day and 45 cents/MMBtu higher on the week.

** Despite the cooler temperatures supporting heating demand in the US on the week, sources expect that milder temperatures in the US may return which would dampen demand from the heating sector. Analysts at S&P Global suggest that the US still remains comfortably stocked to deal with domestic demand and export demand up until the early months of 2024.

** US LNG exports in November continued to rise and reached 6.63 million mt, rising by 1.68 million mt week on week, according to data from S&P Global. Around 49% of volumes were headed to Europe, 3% to Asia, 4% to South America and the rest yet to be nominated.

** “The year-on-year heating degree days (HDD) comparison could be a detail to watch out for amid the bearish market scenario,” analysts at S&P Global said. Last winter was relatively mild, marking an already low point for heating demand, they said. The projected winter HDD was significantly higher than a year ago, and it is also slightly below normal. The potential upside for heating demand could be limited even though the year-on-year HDD projection is higher due to the disparity in regional heating requirements, as the northern region faces milder weather compared to the southern side.
LNG swaps

** Down the curve, prices were still seeing relative support as the market continues to expect increased demand in Q1 2024. Sources still see the cooler forecasts heightening sentiment for December but are awaiting to see the rise in activity in January and February. Although open interest has lowered in December and January, pressure it still being seen in January.

** In the NWE forward curve, full-month January was assessed at $14.191/MMBtu, while February 2024 and March 2024 were assessed at $14.479/MMBtu and $14.383/MMBtu, respectively.

**Arbitrage economics out of the US selling into Asia over Europe have been volatile in the recent weeks, with economics of selling into Asia plummeting at the latter half of last week. Expectations of cooler temperatures in early 2024 could help to bolster prices for Europe and Asia as they both look to draw in more supply to fill heating requirements. However, the moderate demand growth and risk of milder temperatures could keep prices subdued in the coming weeks.

**Volatility was still expected to continue as the market tugs between competing factors. Panama Canal delays should keep prices in Asia at steady premiums for now, however, with the economic and demand signals in China still relatively depressed, LNG prices could be battling to find support.
Source: Platts