As merchants wait for higher market pricing, more than 30 tankers carrying liquefied natural gas are sitting idle off the coast of Europe, according to Business Insider.
Vessels holding position
According to statistics cited by the FT on Friday from Vortexa, the ships are at sea in north-western Europe and the Iberian peninsula and are carrying $2 billion worth of LNG in total.
According to Felix Booth of Vortexa, “LNG tankers have been lining up outside European LNG receiving terminals, pursuing what they thought to be the premium market for this LNG.”
Booth predicted that it will take the tankers another month to locate a terminal where they can unload their cargo because access has grown more difficult as storage facilities have gotten full.
He noted that there is an incentive for these vessels to hold positions for the time being because it is anticipated that colder weather will ultimately increase demand for energy and raise costs.
Falling prices
Because of worries that Russia’s reductions in export flows might lead to an energy catastrophe in the winter, natural gas prices in Europe have dropped from their August highs, when they reached 346 euros per megawatt-hour.
Prices have fallen as a result of milder-than-average temperatures, fewer gas usage, and Europe’s storage facilities quickly filling up in time for winter.
However, the merchants who are keeping their tankers offshore are placing bets that prices will increase in the coming months as colder weather sets in and increases demand for heating as well as the discharge of gas from storage.
The benchmark European price for natural gas, Dutch TTF futures, was down 3.42% on Friday at 121.145 euros per megawatt hour on the ICE platform. That is a 60% decrease from their summer peak.
Replacing Russian gas
Another factor that could push up prices is the state-run energy giant of Russia’s threat to fully cut off natural gas imports to Europe if Moscow implements a gas price cap.
According to the FT, 30 more vessels are anticipated to join those offshore before the winter months.
Spain saw a similar LNG tanker backup in the middle of October because the nation’s storage facilities quickly fill up as other European nations rush to replace Russian gas before winter.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: Business Insider
