Narrowing JKM-TTF Weighed on By High Qatari Volumes to Asia

The weak JKM premium to European gas prices suggests that the high volumes delivered to Asia are more likely the result of a supply push than of a demand pull, Goldman Sachs said in a note.

• January LNG imports were strong with Chinese LNG imports at over 90mtpa, 20mtpa higher year on year, the note said.
• The drop in JKM-TTF spreads was driven by a combination of mild weather across most of Asia and higher Qatari supply to Asia – driven by ongoing Red Sea tensions – while US deliveries to Asia remained high in January.
• The bank expects this incremental Qatari supply flow to be partly offset by reduced US LNG deliveries to Asia but given the longer journey time of US flows to Asia relative to that of Qatar, this will take into February to impact physical balances.
• While reduced US LNG deliveries to Asia should raise the JKM-TTF spread higher from Jan levels, near-term upside to the spread is likely limited at approximately $1/mmBtu by persistently mild Asia weather.
• The bank forecasts the Feb/Mar JKM-TTF spread at $0.75/mmBtu from $1.50 previously. The forward JKM-TTF spread for BalWinter remains depressed at $0.32/mmBtu.
  • JKM Mar 24 down -14.3% at 9.44$/mmbtu
  • JKM-TTF Mar 24 down -1.5$/mmbtu at 0.21$/mmbtu