LNG imports into Europe fell in July to the lowest level since November 2021 as low European benchmark natural gas prices are discouraging traders to ship many cargoes to the continent right now.
Europe’s LNG imports declined by 7% year over year in July, to 8.6 million tons, the lowest import volumes since November 2021, when the energy crisis in Europe began, ship-tracking data compiled by Bloomberg showed on Wednesday.
The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, were at $30.43 (27.71 euros) per megawatt-hour (MWh) as of early Wednesday in Amsterdam.
Prices jumped earlier this week as maintenance offshore Norway, including at the giant gas field Troll, reduced pipeline gas exports from Norway, which is now Europe’s single-largest gas supplier having ousted Russia from the top spot after the Russian invasion of Ukraine.
However, Europe’s benchmark natural gas prices have fallen in recent months and are now 80% lower than the records seen last summer amid ample gas inventories with storage sites on track to be full well in advance of EU targets.
EU gas storage levels are much higher than the five-year average and the levels from this time last year, easing concerns about Europe’s gas supply. The EU gas storage sites were 85% full as of July 31, according to data from Gas Infrastructure Europe.
Comfortable inventory levels are capping the price gains from Norwegian maintenance stoppages, keeping European prices lower.
The low European natural gas prices discourage traders from sending too much LNG to Europe now as sellers are looking at the Asian market where spot LNG prices have risen amid heatwaves in Japan, South Korea, and parts of China.
“The discount of European gas prices compared to Asian LNG prices increased to an average of around US$2.1/MMBtu in July compared to an average of around US$0.3/MMBtu in June 2023,” ING strategists Warren Patterson and Ewa Manthey said earlier this week.
“The higher discount in the European gas market could help divert more LNG cargoes towards Asia and reduce the supply glut in the European market.”