Is a new crisis coming for the LNG market?

According to Energy Press, the spot LNG trading market is quieter than usual for this time of year as inventories in Europe and Asia are at high levels and temperatures are mild.

Demand in Europe and Asia increased in November compared to a warmer October, but spot LNG prices in Asia have fallen over the past three weeks, and benchmark prices in Europe have eased in recent days on concerns about supply disruptions. Mediterranean, has decreased.

However, the calm of the LNG market could turn into a storm if new supply concerns arise and a cold European or Asian winter.

Analysts and forecasters say that governments and markets should not be complacent because with winter approaching, the risk of limited supply in the market and rising prices remains strong.

According to Kepler, demand for LNG in Asia and Europe increased this month compared to October. Imports in Asia will increase from 21.18 million tons in October to 22.67 million tons in November, with China leading the import and growth. It is estimated that Japan’s LNG imports will remain stable this month compared to last month. India’s imports are expected to decline compared to October as higher prices last month may have deterred price-sensitive Indian buyers from buying more LNG for November.

Kepler data shows European LNG imports are also rising and are expected to rise this month to their highest level since May.

LNG imports to northwest Europe are expected to grow by 30% in November compared to October, amid higher expectations at the start of the heating season, according to LSEG’s preliminary estimates.

Average spot LNG prices for December delivery in Northeast Asia fell three percent last week to $16.50 per mmBtu, despite higher demand and the arrival of LNG shipments to Europe and Asia. Spot LNG prices in Asia have fallen for three straight weeks on the back of mild weather and high inventories. In addition, Chinese energy giants have increased the resale of LNG cargoes to other Asian countries this year to boost trade profits and balance supply and demand. Higher LNG resale volumes will help bolster inventories and provide reassurance against potential disruptions.

Although the LNG market looks calmer this November, no one can really predict what the Northern Hemisphere winter will be like. Last year’s winter in Europe was warmer than usual, but it is not clear that this winter will be the same as last year, while it is the temperature that affects the LNG market and price.

Russell Hardy, director of Vitol Group, said last month that some of the lost demand for gas in Europe caused by the energy crisis and high prices may never be recovered. Even with lower demand for gas, Europe and its biggest economies are not completely out of danger. The

RWE, Germany’s largest power company, warned last month that Germany is still at risk of gas supply disruptions.

According to the Oil Price report, the US government has warned that adverse weather conditions or unplanned supply disruptions may lead to a significant price increase and its negative impact on the balance of the global natural gas market.