Potential supply glut in Atlantic observed as global LNG flows are directed towards Europe

Meanwhile, European pipeline gas Dutch Title Transfer Facility prices for March climbed 8% week-on-week to US$15.9 per MMBtu on 4 February 2025, attracting LNG cargoes from other regions, which will likely be a headwind for additional price gain momentum.

In the US, weather forecasts vary by region, but feedgas levels to US LNG projects remain healthy, tightening domestic fundamentals.

Asia

Asian derivatives prices for April 2025 went up 5.7% week-on-week to US$15.1 per MMBtu, with liquidity recovering to 928 lots on the inter-continental exchange on 4 February 2025, a 6.5-fold increase from just 143 lots a week earlier.

Fundamentals remain weak and buying activity is limited in Asia amid the Lunar New Year holiday season, with some traders based in Singapore expressing concerns about weak demand in China.

In the LNG spot market, the Petroleum Authority of Thailand is seeking three March 2025 delivery cargoes, with bids due on 6 February 2025.

Meanwhile, Bangladesh did not fulfil its 27–28 February or 5–6 March 2025 delivery requirements as the offer levels received were higher than anticipated.

Further down the curve, Japan’s Inpex issued a tender seeking a 21–25 May delivery to Japan, which closed on 4 February 2025.

LNG inventory held by major Japanese power utilities went up 12% week-on-week to 2.41 million t as of 2 February 2025, which is higher than the 2.18 million t seen for both the February 2024 and five-year averages. This storage level could fall countrywide as colder weather hits western Japan later this week.

However, Japan also has, on average, 30% more available nuclear capacity in February 2025 compared to February 2024, which could replace LNG-fired power plants as baseload. Of the 14 restarted nuclear power plants, 13 are located in western Japan.

In the long term, Shikoku Electric announced plans to build the 600 MW unit 5 at its Sakaide gas-fired power plant in west Japan’s Kagawa prefecture. This plant is likely to have 63% generation efficiency which would require approximately 45 000 t of LNG each month.

Shikoku Electric imports more than 90% of its LNG from Malaysian state-run energy giant Petronas, typically via its long-term contract which began in 2010 and lasts for 15 years until March 2026, assuming the contract is not extended.

As most US-origin LNG is pointed to Europe under the closed arbitrage environment, market participants expect China’s announcement of an additional 15% tariff on US LNG to have a limited short-term effect on the LNG market.

However, this may trigger Chinese long-term contract holders to heavily engage in swapping out their US-origin LNG to other regions as they did in 2019–2020. US volumes account for approximately 10% of China’s contracted volume in 2025, and there could be an opportunity for more volumes from other major LNG exporting regions, such as Australia and Qatar.

Elsewhere, Oman LNG is offering three cargoes for March and April 2025 delivery, while Adnoc was offering one LNG cargo for delivery between the second half of March and 3 April 2025.

Europe

Northwest Europe LNG delivery for March 2025 increased 6–7% week-on-week to approximately US$15.2-15.3 per MMBtu on 4 February, with prices peaking at US$15.7 per MMBtu on 3 February 2025.

Europe continues to pull LNG from other regions as prompt storage levels have fallen to approximately 52% on 3 February, compared to 37%, 71%, and 69% on the same day in 2022, 2023, and 2024, respectively.

Charter rates in the Atlantic are witnessing historical lows, with recent two-stroke carriers fixed at rates as low as US$2000 per day in the week of 27–31 January. Meanwhile, German terminal operator DET was offering regasification slots at the 5.8 million tpy Brunsbuttel and Wilhelmshaven 1 terminals.

Norwegian pipeline gas flows to Europe remained at around 323.8 million m³ per day on 1 February, barely changed from a week earlier. However, gas production was reduced at the Asgard, Njord, and Sleipner fields until at least 5 February 2025.

US

March prices traded 4.2% higher week-on-week at US$3.3 per MMBtu on 4 February, with feedgas levels to US LNG projects remaining strong at around 15 billion ft³ per day since 31 January 2025.

Colder days are expected in some regions, such as the Pacific from 5–12 February and the Mountain region from 7–19 February. However, supply is expected to rebound this month, averaging around 106 billion ft³, which is higher than the 102–103 billion ft³ seen in January 2025.

Tariff threats and the potential for reduced imports from Canada supported prices this week. The US imported approximately 5% more gas from Canada in 2024 than in 2023. US President Donald Trump agreed to pause the tariffs on his nation’s two neighbouring countries for 30 days. While they are currently on hold, they are not off the table completely, meaning they are likely to continue impacting prices in the short term. Additionally, storage withdrawals reported on 30 January 2025 were higher than market expectations. The withdrawal of 321 billion ft³ pushed inventories below the five-year average.