Trade in liquefied natural gas (LNG) will soon be dominated by middlemen. ‘Portfolio players’ with heroic demand assumptions are buying up startling volumes of LNG amid a notable flatlining in winter gas consumption in Europe. International oil companies and trading houses are going long on an expensive fuel that most analysts believe will be in acute oversupply in just a few short years — or perhaps sooner. But a closer inspection suggests there is method to the middlemen’s madness.
First, let’s take stock of the market. Europe’s supposed ‘post-Russian gas crisis’ is deflating before our eyes under the weight of stagnant winter demand. Prices on Dutch Title Transfer Facility (TTF, the European benchmark for natural gas), have fallen 20% in the last two weeks alone to the equivalent of $12 per million British thermal units (MMBtu) — despite a brief cold snap that all but drained the UK’s meagre gas stocks.
Read entire article at Energy flux.
