Written by Tsvetana Paraskova from OilPrice.com
Europe is currently experiencing a surge in natural gas prices, with the premium over the U.S. benchmark widening significantly. This trend indicates that U.S. LNG exporters are likely to increase shipments to Europe in order to capitalize on the growing price difference.
Currently, the U.S. benchmark price, Henry Hub, is approximately 80% lower than the Dutch TTF Natural Gas Futures, which serves as Europe’s gas trading benchmark, as reported by Reuters columnist Gavin Maguire.
The substantial premium of European prices over U.S. prices is expected to encourage LNG exporters to increase deliveries to Europe during the winter season.
Last week, the European benchmark price reached its highest level since November 2023 due to concerns raised by Austria’s OMV about a potential disruption in Russian pipeline gas supply and rising demand for heating and electricity amid colder weather.
While Gazprom did halt its supply to OMV, gas flows from Russia to Austria have not experienced a significant drop.
The European natural gas market has been tense with the onset of winter, low wind speeds in northwestern Europe, the OMV-Gazprom conflict, and the impending expiration of the gas transit agreement through Ukraine on December 31, 2024. Ukraine has stated that it will not engage in negotiations to renew the agreement with Russia.
With the increase in European prices, the amount of natural gas being sent to the seven U.S. LNG export facilities was on course to reach a 10-month high earlier this week.
The higher prices in Europe have also led to a redirection of LNG shipments initially intended for Asia, as Europe currently offers better prices.
Just last week, at least 11 cargoes were redirected from Asia or Egypt to Europe, as reported by Argus, citing data from Vortexa on vessel movements.
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