Look who is creeping back: the JKM premium over TTF is gradually returning amidst high European storage levels and subdued gas demand.
TTF lost almost 40% of its value since late April to drop below $8/mmbtu -its lowest level in almost 2 years.
High storage levels are weighing on injection needs, while gas demand remained subdued due to a combination factors.
This includes higher renewables, improving nuclear availability and industrial gas demand not picking up so quickly…
JKM was somewhat more resilient and fell by around 20% since late April.
Pockets of demand start to emerge, especially now that spot prices are well-below the oil-indexed range and the cooling season is ready to start.
The return of the Asian premium if sustained at around $1-1.5/mmbtu, could shift LNG flows back to Asia in the coming months.
Hence, European LNG imports could decline over the summer, resulting in a more gradual and balanced filling of storage sites -at current rates, we would hit full tank by mid to end-August.
What is your view? How will the summer market evolve? Is the Asian premium here to stay for the cooling season?
Source: Greg Molnar (LinkedIn)