Winter outlook: Europe and northeast Asia face liquefied natural gas price exposure

Winter outlook: Europe and northeast Asia face liquefied natural gas price exposure With yet another reduction in Russian pipeline gas flows expected at the end of the year, Europe is more heavily reliant than ever on the global liquefied natural gas (LNG) market, where it has to compete with buyers from northeast Asia and elsewhere around the world.This is helping support European prices, despite tank-top stock levels and lackluster demand, with potential for spikes this winter if temperatures are below normal.With the record gas prices of 2021/2022 only recently subdued, some in Europe remain concerned over the potential for a return of high energy prices this coming winter.Reduced pipeline flows mean LNG is now the undisputed marginal unit of energy-determining the price of both gas generally and electricity across the continent.European buyers will be competing directly with buyers in Japan, South Korea, and China in the global LNG winter spot market-so a cold (or warm) snap anywhere across Eurasia will have an impact on prices everywhere.This December, Europe is expecting an end to the deal that allowed Russian gas to transit Ukraine, which means an even greater reliance on LNG.The heavy reliance comes despite European stocks close to tank top for the third year running. 1 Through October, the assessed price of LNG delivered to Europe was just below the Dutch TTF gas futures price, and the two are likely to move in tandem throughout the winter.Global gas and LNG prices are higher than they were last year, with Asian LNG prices for November delivery into north-east Asia at $13.10/mn Btu on October 3slightly above delivered levels in Europe, which stood at $12.62/mmBtu on the same day, according to Platts.This was a $0.21/mnBtu discount to the November gas price at the Dutch TTF hub.By mid-month, Asian prices for December delivery had reached 13.50/mnBtu, with European prices moving in line.