- East Med LNG prices have weakened due to lower demand and competitive pipeline gas.
- High storage levels and mild weather add bearish pressure to LNG prices.
- Shipping length and low freight rates contribute to LNG price discounts in East Med.
East Mediterranean LNG prices have dropped against European levels. Weak demand, coupled with cheap shipping, has softened premiums, according to industry sources, reports SP Global.
East Med Prices Dip Below Dutch TTF Gas Hub
On Oct. 25, Platts assessed East Med LNG for December at $13.728/MMBtu, a 13 cents/MMBtu discount to the Dutch TTF gas hub.
This is the weakest price differential seen since March.
Seasonal Pricing Trends
East Med LNG has averaged a 1.8 cents/MMBtu discount in winter.
It was contrasting with a 4 cents/MMBtu premium during the summer.
High Storage Levels Pressure Prices
Underground gas storages in Italy and Croatia are nearly full, depressing demand for LNG in the East Med.
LNG imports in East Med, including Turkey and Greece, reached 1.021 million mt in October, slightly up from September but lower than October 2023 levels.
Competitive Pipeline Gas Reduces LNG Appeal
Traders highlight that cheaper pipeline gas is reducing LNG demand.
“Pipe-gas volumes are so cheap it doesn’t make sense for them to buy LNG,” said one trader.
Shipping Costs Further Weigh on LNG Premiums
Cheap freight rates and longer shipping lengths have led some sellers to offer LNG at discounts in the East Med, adding further pressure on prices.
The Italian PSV natural gas hub saw reduced premiums against other European hubs, remaining elevated but weaker than last year.
Weather-Driven Demand Could Alter Prices
Some traders predict premiums if colder weather hits Italy, but expect it to affect prices only on a daily basis rather than long-term.
Traders remain cautiously optimistic for East Med LNG in Q4 2024 and Q1 2025. Reduced Middle East and North African LNG flows, combined with Egypt’s shift to being a net-importer, may keep East Med prices higher to attract necessary volumes.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: SP Global
