Dozens of ships carrying LNG remain on the coast of Europe Oil and Gas News
The tankers are carrying $2 billion worth of natural gas and are slowly making their way through northwestern Europe and the Iberian Peninsula.
More than 30 ships carrying liquefied natural gas (LNG) are stranded off the coast of Europe, Financial Times reported, as traders hold higher market prices.
According to shipping analytics firm Vortexa, the vessels are carrying $2 billion worth of LNG and are slowly sailing through northwestern Europe and the Iberian Peninsula.
“LNG vessels have been queuing up outside European LNG receiving terminals, chasing what they hoped would be a premium market for this LNG,” Felix Booth, head of LNG at Vortex, told the paper.
“For now these ships have incentives to hold their positions” on the expectation that cold weather will increase energy demand and, in turn, raise prices, he said.
Another 30 ships are sailing across the Atlantic and are expected to join the tanker before winter, Vortex data showed.
LNG vessels in European waters have doubled in the past two months as European countries filled their storage tanks to their limits ahead of winter.
In response to Western sanctions over its invasion of Ukraine, Russia has cut gas supplies to some European countries.
In turn, these countries bought LNG as a substitute, but seasonally warm temperatures have led to reduced demand for heating, which has filled storage facilities and allowed prices to fall.
Natural gas prices in Europe have fallen from peaks in August, when they topped 346 euros ($343) per megawatt hour.
But traders who keep ships on board expect prices to rise in the coming months as colder weather sets in and lifts demand for heating, releasing gas from storage.
This has led to the market being in a “contango” situation, where prices for future delivery are trading higher than for immediate delivery, the FT said.
A similar situation occurred in the oil industry during the coronavirus pandemic, as excess crude caused traders to store oil on ships as floating storage, waiting for prices to rise again.
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