However, steady flows from Russia through Poland and Ukraine to Western Europe appear to have assuaged some concerns around near-term supply.
In addition, Western and Southern Europe have imported 5.5 million tonnes of LNG month-to-date and are on track to exceed October’s total of 5.7 million tonnes.
Mounting congestion at the Panama Canal may be working to Europe’s benefit as US exporters can choose to remain within the Atlantic basin rather than make the arduous journey to Asia via the Cape of Good Hope.
In the US, the gas balance continues to improve as storage levels are now trending at a healthy 2% below normal.
With weather forecasts slanted to above-normal temperatures in coming weeks, there could be some bearish pressure reflected in near term pricing, though sustained high prices in Europe and Asia are guaranteed to sustain record levels of demand for US exports.
In Asia, amid dropping temperatures, Chinese terminals have begun to draw down LNG inventories, driven by increasing gas demand for residential heating.
Most Asian buyers remain wary of further upside to spot prices and may seek to switch to alternate fuels or trade cargoes with other compatriot firms, approaching the spot market only as a last resort.
In Russia, an earlier-than-expected freeze along the Northern Sea Route may affect the passage of Yamal LNG carriers to Asia.
And in Australia, the La Nina pattern may bring with it an intensified cyclone season, raising risks of disruption to (among other commodities) LNG loadings.
But with spot LNG prices at $35/Mmbtu levels, shipping costs – even at these eye watering charter rates – still make up less than 15% of the delivered price, which may explain charterers’ willingness to pay.
Amidst of these bullish signals, the production of the 1st LNG drop at Sabine Pass Train 6 is a welcome development, but it’s not enough.