LNG short-term outlook - October 2021

European gas balances continue to dictate global LNG spot prices. Falling coal prices and increased LNG deliveries into Northwest Europe allowed prompt TTF to drop below $30/mmbtu, with Asian spot LNG also down from its peak. Little change for European utilities: Following seven consecutive weeks of price rises, European TTF finally levelled and fell. Much of this was due to falling coal prices which had been one of the key pillars of support for the recent price escalation. Fundamentally, however, the European gas balance remains extremely tight with only modest increases in LNG deliveries in October, and gas inventory levels remaining below their 5-year range. Optimism around additional Russian gas imports through Nord Stream 2 this winter has been tempered by reductions in capacity bookings through other East-West transit routes (slide 6). Persistent high power prices also limit the potential for further declines in TTF.