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LNG: LNG Floating Storage Struggling Due to Weaker Contango: Platts

LNG
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Weaker European LNG intermonth price contango implied a reduced incentive for floating cargoes, although storage on water was still developing amid low freight rates, Platts said.

  • The NWE front month/ second month spread tightened 29 cents/MMBtu, significantly narrower than the $2.766/MMBtu spread observed on the same date last year.
  • The reduced spread largely eroded the incentive for floating storage as future months would not guarantee a higher price.
  • However, low freight rates have also prompted some floating cargoes, Platts said.
  • The high gas inventories in Europe have also depressed floating storage play.
  • However, the lack of floating LNG storage means the market may find itself short going into Q1, some sources told Platts, with LNG relatively more expensive.

 

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Weaker European LNG intermonth price contango implied a reduced incentive for floating cargoes, although storage on water was still developing amid low freight rates, Platts said.

  • The NWE front month/ second month spread tightened 29 cents/MMBtu, significantly narrower than the $2.766/MMBtu spread observed on the same date last year.
  • The reduced spread largely eroded the incentive for floating storage as future months would not guarantee a higher price.
  • However, low freight rates have also prompted some floating cargoes, Platts said.
  • The high gas inventories in Europe have also depressed floating storage play.
  • However, the lack of floating LNG storage means the market may find itself short going into Q1, some sources told Platts, with LNG relatively more expensive.

 

Keep reading...Show less