Atlantic LNG ships turn toward Europe as winter supply risk grows

what happened

Newsmetry API, in a report by Emily Chow, says several tankers carrying Atlantic-origin liquefied natural gas have shifted toward Europe in recent days rather than continuing to Asia. Expectations for firmer winter consumption, combined with seasonally depleted inventories, are increasing Europe’s pull on flexible global supplies.

The region is beginning the heating season with its weakest gas stock position in years and is expected to buy more LNG to rebuild reserves. That could make the market tighter if Asian demand returns while disruptions around the Gulf continue to limit available cargoes amid the US-Iran war. Vortexa analysts said in a note that EU storage stood at 74% at the end of last week, 15 percentage points below the five-year average.

Vessel-tracking information from Kpler and LSEG showed at least four LNG carriers that had been bound for Asia switching toward Europe last week. Shra'ouh and Al Kharrarah loaded at the Plaquemines LNG export site in Louisiana before heading southeast, then turned north around October 8 to 9. They are now indicating Grain, England, and Zeebrugge, Belgium, respectively. Rosenrot, which collected a shipment from Trinidad and Tobago’s Atlantic LNG, changed direction on October 9 after previously moving away from Europe. Elisa Aquila, carrying a Calcasieu Pass, Louisiana, cargo, adjusted its route several times before returning toward Europe on October 7; it is currently signalling for Dunkerque, France.

The nearest-month contract at the Dutch Title Transfer Facility settled at €84.15 per megawatt hour on Monday, equivalent to about $27.64 per million British thermal units. Asian LNG futures linked to the S&P Global Energy Japan-Korea Marker were priced at $26.09/mmBtu the same day. Vortexa said European LNG receipts over the past week were more than 5% below their four-week mean, but improved shipping economics should encourage imports of flexible Atlantic cargoes.

why it matters

The improved economics of sending flexible cargoes to Europe may redirect supply from Asia. A recovery in Asian buying, alongside continuing Gulf disruptions, would increase competition for available LNG.

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