After natural gas prices have fallen again since the summer, numerous natural gas tankers are parked off the European coast. Natural gas traders are waiting for higher gas prices in Europe.
More than 30 tankers with liquid natural gas are waiting off Europe’s coasts. The reason: The traders would only go ashore when the market prices for gas are higher again, reports the Financial Times, citing data from the energy analysis “Vortexa”. The ships are said to contain natural gas worth two billion US dollars.
According to the report, energy traders are already betting that the autumn price rally, which was boosted by stable supplies and warm weather, will soon come to an end.
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The number of LNG vessels in European waters has doubled in the past two months, according to the Financial Times. As traders speculate on higher market prices, LNG vessels are sitting idle or cruising slowly around the coasts of North West Europe and the Iberian Peninsula.
As European countries have been able to fill their gas supplies to their limit in recent months, the queue has now emerged on the coasts, the Financial Times said. The full storages are a result of the recent high temperatures in Europe. Because there was less heating than usual, gas prices fell again.
At the end of October, “Gas Infrastructure Europe” announced that the European storage facilities were 94 percent utilized – Belgium was even at 100 percent, France at 99 percent. Germany can now show a filling level of 98 percent.
According to the Financial Times, traders are hoping for higher prices in the coming months as temperatures cool over the winter and natural gas stocks in European storage facilities slowly run down. According to energy analysts at Vortexa, it will likely be another month before the ships can visit a terminal for unloading.
But that’s not all: Another 30 ships are on their way and are expected to join the queue before winter, Vortexa told the Financial Times.
However, the natural gas market is currently in a situation where prices for future delivery are higher than for immediate delivery, according to the Financial Times. Deliveries in December would be about 30 percent above the closing price of the November contract. This, too, provides an incentive for traders to hold the loads and deliver as late as possible.
However, according to the Financial Times, the consequences of holding back the gas cargo are already visible: there has already been a shortage of available ships. This in turn results in higher freight prices. As a result, natural gas supplies have become even more unaffordable for Asian buyers. In this respect, the market is artificially tightened.
However, the reaction of gas traders is not unusual: During the peak of the Corona crisis, there was an oversupply of crude oil, which caused traders to react in a similar way. So they parked their oil on ships as floating storage to wait for prices to rise again.