(Yakov Grabar) The closer 2021 approaches, the more questions are arising as to what game supply and demand will play with the European natural gas market during the winter. If the level of consumption is determined by the weather and the impact of growing COVID-19 cases on the economy, then the main supply-side issue refers to the dynamics of imports over that period.
The second half of this year has so far seen lower volumes supplied to Europe both from gas pipeline and LNG sources. With regard to LNG imports, there is also another force standing behind the limited amount of cargoes loaded to European terminals even at a time when the hub prices have regained their earlier losses.
The reason for that is an appetite of LNG suppliers for placing volumes in Asia amid a widening JKM-TTF spread. With the difference in prices standing at around $0.90/MMBtu for Dec20, Jan21 and Feb21, eastward loadings seem to be the top priority for sellers up to at least early next year.
What is not clear is how many spot cargoes can be distributed among Asian buyers this winter, given that the regional importers’ interest for opportunistic purchases can be constrained by attractive oil-indexed prices that will play into Q4 ’20 long-term deliveries.
Source: Yakov Grabar
See original post by Yakov on LinkedIn