European natural gas futures have eased back on news this week that a Chinese major supplier of liquefied natural gas (LNG) is offering to sell spot cargoes to the beleaguered European market.
Bloomberg, citing traders with knowledge of the matter, reported mid-week that the trading arm of Sinopec is offering to sell “dozens of spot LNG cargoes” this year. There were also reports late in the week of another major Chinese trader offering LNG cargoes for sale. The move suggests that China is well stocked.
LNG arrivals in Europe already have increased. More arrivals of U.S. LNG since the turn of the year and U.S. assurances last week about its supplies to Europe, as well as recovering Norwegian gas shipments, already are helping offset Europe’s low gas storage levels and the reduced Russian gas flows to the region (GM Jan. 14, p. 29; Jan. 7, p. 1).
The Dutch front-month TTF gas contract (currently February) in Amsterdam closed at €72.135 a megawatt-hour on Jan. 20. This compares to Jan. 14’s close at €86.97.
While escalating tensions over Ukraine and the new Nord Stream pipeline from Russia to Germany remain on traders’ radar, gas market sentiment was cautiously bearish this week, “driven by the tepid demand in Asia and robust LNG imports in Europe,” according to a note by Rystad Energy, an Oslo-based independent energy research and business intelligence company, as cited by a Bloomberg report on Jan. 19.
Rystad, however, warned that the U.S. has eyes on potential weather-related shutdowns in the coming days.
Meanwhile, daily gas exports from Gazprom PJSC, Europe’s biggest supplier of natural gas, to its main markets in the first 15 days of 2022 fell to their lowest since 2015, Bloomberg reported, citing the Russian supplier.
Gazprom said on Jan. 17 it exported 5.4 million cubic meters to its key markets, which include most of Europe, Turkey, and China. According to Bloomberg calculations based on the Russian gas major’s statements, this equates to average daily flows of 360 million cubic meters, and is almost 18 percent lower than December’s average.
Furthermore, Gazprom does not expect growth in its first-quarter exports “despite the tight fundamentals,” according to Citi analysts in an emailed note to Bloomberg following a meeting with the Russian supplier. The analysts said Gazprom’s near-term focus is on supplying the domestic market, as well as continuing to meet all long-term contractual obligations in Europe.
Moreover, the Russian gas major does not rule out a seasonal drop in second-quarter exports, according to Citi.