LNG in World Markets: Global Spot Prices Surge on Supply Concerns

This current feature was extracted from the latest edition of Poten’s LNG in World Markets, a monthly service published on October 18, 2023.

Spot LNG and gas prices rose towards the end of the first half of October on supply concerns, fueled by tensions in the Middle East and forecasts of a colder winter in Europe. While LNG production remains steady, the potential resumption of labor strikes in Australia could pose risks to supply, although most Asian buyers have remained largely unaffected amid high stock levels.

Asia’s JKM benchmark averaged at around the high-$12s/MMBtu in the first week of October and was assessed at $16.77/MMBtu as of Oct. 13 for November and December deliveries. The European TTF index spiked to $16.62/MMBtu on Oct. 13 for front-month deliveries. Spot cargoes on a delivered basis into Europe have been trading at around a 65¢/ MMBtu discount to the November TTF contract.

In Europe, gas stocks sit at 97%, however, stock levels could be eaten into during the upcoming cold snap anticipated in parts of the continent in the second half of October. The TTF market has been volatile on the renewed chance of strikes in Australia and news of damage to the Baltic connector pipeline, which links the gas grids of Finland and Estonia.

The pipeline is believed to be out of operation until April 2024 and may have been damaged by sabotage, according to the Finnish government. However, market participants see only a short-term impact because alternative supply can come from Finland’s LNG Inkoo import terminal, along with the small-scale Hamina terminal.

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