European LNG Imports Hit Two-Year High As US Flotilla Delivers Much-Needed Supplies

A flotilla of liquefied natural gas (LNG) from the US has finally arrived in Europe, increasing LNG imports on the fuel-starved continent to a two-year high. The fresh injection of natural gas is helping to offset declining Russian shipments. Prices of European natural gas fell Monday.

Data compiled by Bloomberg shows LNG gas imports in northwest Europe jumped to their highest levels since December 2019. The supply comes from a flotilla of up to 20 LNG vessels from the US that began their sailings in mid/late December. 

Fresh supplies of LNG are helping to ease supply woes but will not solve the energy crisis on the fuel-starved continent this winter because stockpiles are at very low levels for this time of year. News of fresh supplies is temporary relief and has resulted in front-month Dutch gas futures falling as much as 6% to 82.50 euros a megawatt-hour and traded at 88 euros around 0600 ET. 

Since mid-December, European gas prices have been halved from about 182 euros to 88 euros today. The downdraft is primarily due to the prospects of the flotilla.

Notably, there is still a significant arbitrage spread between US and EU Nattie prices over and above historical norms…

Here’s our reporting on the new supplies:

• Commodity Traders Find Huge Arbitrage Opportunity As LNG Ships Head For Europe
• European Gas Drops 18% As US Sends LNG Flotilla
• LNG Tankers Clog Up Atlantic Shipping Lanes To Resupply Fuel-Starved Europe
• LNG Tanker Bound For Asia Turns Around, Heads To Europe For Massive Arbitrage Opportunity

“With the peak of winter still ahead, we see a wide range of potential near-term price outcomes and expect elevated volatility to persist,” Morgan Stanley wrote in a commodity note. 

Still, the flotilla only offers the fuel-starved continent temporary relief as Russia gas flows remain muted. The Yamal-Europe pipeline, sending gas into Germany from Russia, has been in reverse for three weeks, and other major pipelines into Europe have recorded below-average flows. 

A resolution to Europe’s energy crisis is certifying Russia’s Gazprom PJSC’s controversial Nord Stream 2 pipeline, but that doesn’t seem possible until summer. So in the meantime, gas prices will remain elevated. If another winter blast comes around, gas prices will undoubtedly go back above 100 euros.