DUBAI: More than 30 tankers holding liquefied natural gas (LNG) are idling just off Europe’s shoreline, the Financial Times reported, as traders are holding out for higher market prices.
“LNG vessels have been queued up outside European LNG receiving terminals, chasing what they expected to be the premium market for this LNG,” Felix Booth, head of LNG at Vortexa, told the newspaper.
“For now these vessels have incentive to hold positions” in anticipation that colder weather will increase demand for energy and in turn drive up prices, he said.
Another 30 ships are sailing across the Atlantic and are expected to join the tankers before the winter, data from Vortexa showed.
LNG tankers in European waters have doubled in the past two months, as European countries filled their storage tanks to near their limits before the winter.
In turn, these countries bought LNG as a substitution, but unseasonably warm temperatures have led to a reduction in heating demand, which in turn kept storage sites full and prices falling.
State of ‘contango’
Prices for natural gas in Europe have fallen back from their August highs, when they topped 346 euros ($343) per megawatt-hour but traders keeping their tankers offshore are counting on prices to increase in the months ahead, as colder weather sets in and lifts heating demand, releasing gas from storage.
This has led to the market being in a state of “contango”, where prices for delivery in the future are trading higher than for immediate delivery, the FT said. (Int’l Monitoring Desk)