In early Feb, the attention of European gas market players has been drawn to this month’s weather forecasts. Preparing for a cold spell in NWE, prompt contracts at major hubs rose in the last two trading days, offsetting the drop in prices earlier this week.
Gas consumption should grow with a fall in temperatures, but the issue is how significant the impact on pricing environment can be. Whereas a month ago, when demand was standing at the maximum level amid cold weather and there were supply-side constraints, it was quite easy ‘to understand’ market movements, the current situation is different because of the resurgence in interest in delivering LNG westwards.
As of 6 Feb, total LNG imports to NWE should exceed 1.8Mt this month, an increase of 50pc as compared to Jan. In the light of the regular cargo diversions, the actual figure for Feb will likely be even higher. Interestingly, more LNG supplies to the UK can also free up some gas piped from Norway, which is in strong demand among British buyers in early 2021.
So, higher consumption resulting from the Arctic blast is placed on one side of the scale, while the rise in LNG imports is on the other. Which is heavier, in your opinion?
Source: Yakov Grabar
See original post by Yakov at LinkedIn.