US LNG EXPORTS TO EUROPE TO RISE AS EUROPEAN GAS PRICES RISE

Although benchmark natural gas prices in Europe hit a one-year high, their premium over US benchmark gas prices was well above the 2024 average, suggesting US LNG exporters are likely to further increase supplies to Europe to take advantage of the widening spread.

The price of the US benchmark Henry Hub is currently about 80% below the price of the Dutch TTF Natural Gas Futures, the benchmark for gas trading in Europe, according to data cited by Reuters columnist Gavin Maguire.

A significant premium in European prices over U.S. prices will encourage LNG exporters to send more cargo to Europe during the winter season.

The European benchmark price rose to its highest level since November 2023 last week, as Austria’s OMV warned of a possible disruption to Russian pipelines and colder weather boosted demand for heating and electricity.

Russia’s Gazprom has effectively stopped supplying OMV, but Russian gas flows to Austria have not yet collapsed.

The European natural gas market has been under stress for several weeks now: the start of the winter heating season, a strong truce in northwestern Europe, a dispute between OMV and Gazprom, and the end of the gas transit agreement through Ukraine, which expires on December 31, 2024. Ukraine has said it will not continue negotiations to extend the agreement with Russia.

As European prices rise, the volume of natural gas flowing into seven U.S. LNG export facilities hit a 10-month high earlier this week.

Rising European prices are also diverting LNG cargoes originally destined for Asia, as prices are now higher in Europe.

At least 11 cargoes were diverted from Asia or Egypt to Europe last week alone, Argus reported, citing ship-tracking data from Vortexa.