Strong trading interest pushes Europe, Med LNG to highs versus TTF gas price

LNG price discounts across Northwest Europe and the Mediterranean narrowed to reach multi-month highs against the Dutch TTF pipeline natural gas price on March 18, as stronger trade reported across the region heightened market sentiment.

Platts, a part of S&P Global Commodity Insights, assessed the May Northwest Europe LNG marker at a discount of 23.5 cents/MMBtu to the TTF hub futures price for the same month on March 18, while the East and West Med prices were at discounts of 3.5 cents/MMBtu and 28. 5 cents/MMBtu, respectively.

The Northwest European and West Med discounts to TTF represented the narrowest levels since Oct. 3, while the East Med differential was the narrowest recorded since the assessment was launched on Dec. 20.

European pipeline gas prices have also been experiencing a period of continued strength, which can often result in a widening of the LNG price discounts. However, traders have this week cited much "stickier" spreads, with bids and offers in the market for LNG holding their ground and trades reported at between TTF minus 30 cents/MMBtu to minus 20 cents/MMBtu.

Once the injection season starts in full swing, and prices get an upward push, spreads to the TTF are expected to widen, sources said.

"I see a bit of resistance around some of the high...once that starts to go up again, you'll see the discounts increasing," said one Atlantic-based trader. "As the [price] starts to move up, people will feel that they need to rush and get everything now before it becomes uncompetitive again."

Buyers in the Mediterranean said they have seen diverging trends in recent months. The ongoing shipping constraints in the Red Sea have been continuing to push Italian and East Mediterranean buyers to bid higher to attract supplementary volumes from elsewhere. Meanwhile, the West Med has seen wider discounts to supplies in Northwest Europe and the East Med, with traders seeing weaker economics into the region.

LNG imports in March so far into the West Med -- Spain, Portugal and the south of France -- as well as the East Med -- Turkey, Greece and Croatia -- totaled 2.10 million mt as of March 19, according to data from S&P Global Commodity Insights analysts. This was around 52% of the total seen in February.

Sources said they expect buying activity to slow this month and into April