LNG Daily Newsletter

Market news

Spot LNG to cost more than Term supply for 2 years: Bernstein

Spot LNG will trade at $8/mmbtu in 2021 and rise to $9.50 in 2022, more than double last year’s price of $4.20.

“The tightening of LNG markets has been simply breathtaking and a sharp reminder for any commodity investors of how quickly things can change.”

Limited supply is helping tighten the market, with only 10-15 mtpa of new supply expected over next 4 years versus
30 mtpa over past 4 years

Shipping

Winter LNG Boom Means the Most Expensive Cargo Ships in History: Bloomberg
BP last week chartered an NLNG’s LNG tanker “LNG Abalamabie” to load a prompt cargo from the US’s Freeport facility
for $350,000/day
Note: The previous high for any kind of commodity carrier was set in late 2019 when a VLCC was booked for daily
earnings of $308,000.
Freight rates for LNG vessels have skyrocketed amid robust Asian spot gas demand in a cold winter, delays traversing
the Panama Canal and a lack of available vessels

Taiwan’s CPC Corp gets first LNG cargo under long-term deal with Cheniere
CPC noted that the 149k-cbm “Fuji LNG”, carrying a cargo from Cheniere’s Corpus Christi LNG facility, docked at the
Taichung LNG plant on January 10.
Note: CPC will receive 2 mtpa, or 30 cargoes annually over 25 years until 2045

160k cbm Baltic LNG Index (Jan.8)
BLNG1 Gladstone / Tokyo RV $219,893 (+20,026)
BLNG2 Sabine / UK Cont RV $320,780 (+95,471)
BLNG3 Sabine / Tokyo RV $228,486 (+25,914)

 

Drivers

Scheduled natural gas flows to US LNG exports plants at 10.9 bcfd on Jan.10
Feedgas to Freeport LNG and Elba LNG plant fell in recent days

Europe gas storage was at 67.4% capacity on Jan.9, compared with 5-year avg for that day of 66.9%
storage levels closer to the 5- year average.


As
Polar Vortex Stirs, Deep Freeze Threatens U.S. and Europe: Bloomberg
High in the atmosphere above the North Pole, a spike in temperatures may soon send bone-rattling chills spilling down
through the Northern Hemisphere.
The icy blasts threatening to sweep across North America, Europe and Asia starting in late January are from the same
weather pattern that triggered the 2014 cold snap known as the polar vortex

HPC/OTCex Group

Asia’s Icy Winter Snarls Ports and Sends Energy Prices Soaring: Bloomberg
China’s Sinopec used an icebreaker ship and hot water cannon at import terminal to discharge LNG in Tianjin.
A La Nina weather phenomenon has sent a wave of cold air across North Asia this winter.
Japan, China and Korea are the world’s biggest LNG importers, and the extra demand has helped send prices for spot
cargoes and tankers carrying the fuel to record levels.

Cargo trades

Spot LNG prices in North Asia surged into the $30 range as end-users rush to find cargoes to refill stockpiles emptied
by colder winter weather.
Intraday DES JKTC: 1H Feb
$31.125, 2H Feb $22.450: Platts
Trafigura raises bid at $36.05 for a Feb.1-2 delivery cargo to Incheon, South Korea: Platts MoC
.nearly $15 higher than Friday’s record. Backwardation widened further, indicating strong demand for prompt supplies.
Trafigura raises bid at $30.70 for a Feb.12-16 delivery cargo to Tangshan, China: Platts MoC
IOC seeks a DES cargo for Feb. 13 delivery to the Dahej terminal. Offers d

 

Prices

U.S. gas futures rose to the highest price in almost 3 weeks amid speculation that a polar vortex may descend on North
America and trigger a surge in demand for the heating fuel.

European natural gas prices traded at a two-year high on Monday as a widespread cold snap boosted heating demand,
lowering once-robust storage levels closer to the seasonal average.

Oil closed little changed with a stronger U.S. dollar and broader market selloff sapping momentum from a recent rally.
.With crude starting the year strongly, Goldman Sachs said it expects
Brent to reach $65 a barrel by the summer, sooner
than previously anticipated

(Source: Goldman Sachs – Natural Gas Price Deck, $/mmBtu (forwards as of Jan 8th, 2021))

  • HH $2.747 (Feb.21)
  • JKM $19.700 (Feb.21)
  • NBP $8.949 (Feb.21)
  • TTF $7.886 (Feb.21)
  • Brent $55.66 (Mar.21)
  • Oil parity $4.45 (8%), $7.24 (13%)
 

END OF REPORT

(Source: Bloomberg, Reuters, ICIS, Platts, Offshore Energy, Argus, Oil price, NYMEX, CME, AGSI)

 

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