High Storage Limiting Gas Impact in S Korea Despite Rising Temperatures

Rising temperatures in South Korea could increase cooling and therefore LNG demand although the impact is likely to be limited by healthy storage levels enabling cover from storage withdrawals. End of June inventories are estimate at more than double last year at 4.5m metric tons according to Bloomberg.

• The higher than expected spot prices are adding uncertainty over some buying interest for this summer according to Bloomberg. Foran Energy and GSPC didn’t buy possible cargoes for delivery in June and July.
• A rise in nuclear generation in Japan and South Korea has also helped to limit the use of gas for power generation.
• The increasing risk of demand from Asia is a key factor in supporting European gas prices due to competition for key LNG supplies.
• Gas spreads are still showing JKM - TTF spread of +0.35$/mmbtu despite the recent rally in TTF. The July US netback to Asia was this morning showing at 5.75$/mmbtu compared to a netback to Europe of 5.21$/bbl according to Bloomberg.
  • TTF JUL 23 up 6.7% at 28.1€/MWh
  • NBP JUL 23 up 7.3% at 66.84p/th
  • JKM Jul 23 down -1.7% at 9.24$/mmbtu
  • JKM-TTF Jul 23 down -0.7$/mmbtu at 0.37$/mmbtu
  • US Natgas JUL 23 up 0.2% at 2.33$/mmbtu