Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
By Irina Slav – Nov 27, 2024, 1:24 AM CST
The price of liquefied natural gas in Asia could surge to above $20 per million British thermal units this winter as supply tightens in Europe, Goldman Sachs has predicted.
“That’s the near term dynamic, given this vulnerability of Europe, the lack of spare capacity, the loss of the residual Russian volumes currently going through Ukraine, and I should say, a colder than average start of the winter,” the co-head of global commodities at the bank, Samantha Dart, said as quoted by Reuters.
For the past two years, Europe has been lucky with milder than usual winters that led to lower than usual gas demand although the seasonal pick-up in demand did cause increases in LNG imports, tighter global markets, and higher prices then as well. Now, the European winter seems off to a regular start, which means low temperatures and significantly higher demand for electricity—and gas.
Earlier this year, gas prices in Europe spiked following a production outage at a Norwegian platform and geopolitical jitters about the Middle East. Prices normalized soon enough but they did highlight the precarious situation that Europe has put itself in with regard to energy security. A massive buildout of wind and solar capacity, which both tend to underperform consistently during the winter months has been the chosen path. This has only boosted reliance on imported gas, leading to still higher prices—and prices wars with Asia.
At the end of last week, the European gas benchmark, the Title Transfer Facility price, hit the highest in two years as winter began settling in and demand for heating jumped. LNG traders have already started diverting cargoes from their Asian destinations to send them to Europe, which is paying a premium. Per Argus data, at least 11 such cargoes have been diverted in the past few weeks. The price jump is only a matter of time.
By Irina Slav for Oilprice.com
Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
