With EU gas storage sites near full, the risk of another major energy crisis has lessened, and despite the risk of supply outages, the LNG market has grown more mature.
Until last year, the global LNG market featured long-term contracts indexed to crude oil futures prices, and spot deals.
Strikes were avoided at one of the facilities, but the danger remained for the other two, keeping a floor under gas prices. But over the past year, attempts have been made to put a sort of a ceiling on gas prices in Europe—and more specifically, LNG prices. The effort is beginning to pay off. A mature market is a lower-risk market, and this is what has been happening to the LNG market over the past year and a half. This, however, has not really reduced the extent of volatility in that market, as evidenced by the effect that news of the potential strikes at Australia’s top three LNG facilities had on LNG prices, especially in Europe.
No doubt, it is good to have a liquid market, and now, thanks to the rise of the Dutch benchmark TTF at the expense of the UK’s National Balancing Point, LNG traders have such a liquid market. Trade is more active than ever and easier than ever, even intercontinental trade with Asia.
Danmark Seneste Nyt, Danmark Overskrifter
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