The price of LNG (liquefied natural gas) in Rotterdam has reached $1873 per ton, indicating a $97 increase per ton compared to last week. This price increase coincides with an approximately 3% rise in the price of Dutch natural gas contracts (TTF) over the past week. TTF is recognized as the benchmark price for gas in Europe.
Reasons for the Increase in LNG Prices
The increase in LNG prices is due to the rising demand for electricity generation using gas, resulting from reduced wind power generation and unexpected outages at Norwegian gas production facilities. According to analysts, the market is moving towards higher prices, and there are no immediate signs of a decrease in LNG flows from the Gulf. Additionally, several unexpected outages in Norway have added to concerns about gas supply.
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A gas analyst from the International Energy Agency (IEA) has pointed out concerns about gas supply, adding that disruptions in LNG supply through the Strait of Hormuz, rising temperatures, four unexpected outages in Norway, and gas withdrawals from reserves in some countries have supported TTF prices. He also mentioned forecasts of falling temperatures in Europe and concerns about gas supply in the upcoming winter.
Status of Gas Reserves in Europe
Underground gas reserves in the European Union reached 74.7% on October 30, showing little change from the previous week, but 10.5% lower than the same level last year. Analysts state that the level of gas reserves in the European Union has reached its lowest point since 2013. Weather forecasts also indicate falling temperatures and calm over the weekend, which could help the market under pressure from Middle Eastern uncertainties and low gas reserves.
Additionally, the price of liquefied biomethane (LBM) in Rotterdam has also risen to $2575 per ton. Biomethane prices in Germany have increased due to rising gas prices, not due to an increase in green premiums. These price increases have been caused by the Middle Eastern crisis and low gas reserves in the market.
In Singapore, LNG prices have also reached $1939 per ton, indicating a $74 increase compared to last week. This increase is less than the price rise in Rotterdam, and the Singapore premium over ARA has decreased to $66 per ton. LNG prices in Singapore typically align with the NYMEX Marker for Japan/Korea, which has reached $32.84 per MMBtu.
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