(Oil Price) – At least six LNG cargoes loaded in the United States and initially en route to Asia have been diverted to Europe as European natural gas prices have rallied in recent weeks while Asian prices drop with weaker demand and high inventories.
The diverted U.S. cargoes were initially traveling to Asian buyers in China, South Korea, Singapore, and Thailand. However, the six tankers diverted in the Atlantic and headed to Europe between January 8 and 14, according to data from analytics firm Kpler cited by Reuters.
Asian spot LNG prices have risen in the winter period, but not enough to keep a wide enough premium to Europe’s benchmark prices to incentivize selling U.S. cargoes to Asia, according to shipping data and analysts.
In Asia, the average LNG spot price for March delivery into northeast Asia fell to $13.90 per million British thermal units (MMBtu) last week, according to industry sources quoted by Reuters. That’s lower compared to the $14.00 per MMBtu price assessed in the previous week, and the second consecutive week of falling Asian spot LNG prices.
At the same time, Europe’s benchmark natural gas prices remain high in January, following the halt of Russian pipeline gas supply via Ukraine and the sub-zero temperatures in many of the biggest gas-consuming economies in northwest Europe.
The early winter cold snaps also prompted Europe to boost its liquefied natural gas imports to a near one-year high in December, with arrivals of American LNG also at their highest since January 2024.
LNG vessels divert to Europe as the U.S. LNG arbitrage to Asia remains closed, Spark Commodities said last week.
Europe’s TTF day-ahead prices for January remain high, and Spark’s assessment of the US arbitrage for February 2025 shows the arbitrage to Asia remains closed at -$0.845/MMBtu, “indicating that US vessels continue to be incentivized to deliver to NW-Europe as opposed to NE-Asia,” commodities analysts said.
By Tsvetana Paraskova for Oilprice.com
