LNG Prices Withdraw From All-time Highs

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Natural gas markets in Europe have been extremely volatile for the past two months, reports Gasum.

A historic high! 

The Dutch TTF front-month-ahead gas price reached a historic high of 146.50 EUR/MWh in December 2021, leading to LNG cargoes changing their course and heading towards Europe.

Northwest Europe LNG prices remain at a premium to the JKM price, increasing supply into Europe. However, persistent lower pipeline supplies from Russia and low inventory levels keep the price floor high. Risavika LNG index is at 94.67 EUR/MWh for March contracts.

Benchmark oil prices has been supported by geopolitical risks and short-term fuel switching, rather than by more sustainable demand increases.

Incidents threatening oil supplies 

Four incidents threatened oil supplies only in January. Protests in Kazakhstan, pipeline outage in Iraq, attacks in the UAE and ongoing tensions between Russia and Ukraine led to Brent reaching over 90 USD/BBL.

On top of that, about 80% of all European refineries depend on natural gas to power their plants, with refineries located in the big oil refining centers like Northwest Europe’s Amsterdam-Rotterdam-Antwerp getting virtually all their power from natural gas.

With natural gas prices staying elevated, there is a possibility for worsening cracking margins for refineries in Europe and tighter oil products supply as a consequence.

Fuel oil 3.5 (FO 3.5) price is at 487.44 USD/t, low sulphur oil (MFO 0.5) is at 614.93 USD/t and marine gasoil (MGO 0.1) was trading at 753.58 USD/t for March contracts.

Front Month Price index

LNG Risavika*

LBG blend

Risavika**

FO 3.5 FOB Rdam

MFO 0.5 FOB Rdam

MGO 0.1 FOB ARA

ULSD FOB ARA

Unit

94.67

97.67

34.95

42.22

51.74

56.14

EUR/MWh

1603.77

1654.59

487.44

614.93

753.58

783.03

USD/t

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Source: Gasum

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