Total U.S. feedgas demand averaged 14.2 Bcf/d in December, up 300 MMcf/d over November levels and a record high. Feedgas intake was strong at every terminal, but particularly at Sabine Pass and Cameron, both of which had record levels of intake last month. It was also a record-breaking month for LNG sendout. The U.S. exported 121 total LNG cargoes in December, 11 more than the previous all-time high. Just over 60% of those cargoes went to Europe. The total number of cargoes the U.S. has exported to Europe has been stable since October. U.S. exports to Asia increased month-on-month with the higher level of total U.S. exports. Exporting to Asia is currently somewhat complicated given the conflict in the Red Sea making passage through the Suez Canal increasingly difficult and the ongoing traffic restrictions at the Panama Canal because of low water conditions. Sixteen LNG cargoes were transported via the longest route to Asia, the Cape of Good Hope, in December, an all-time high for LNG tankers taking that route. Nine vessels traveled via the Suez Canal, less than half the number in November, and all of those were in the first half of the month. The last tanker from a U.S. terminal to take the path through the Suez Canal departed on December 18. Nine vessels traveled via the Panama Canal, same as the month prior, which is when the canal restrictions became more severe.
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U.S. LNG Exports Strong, Despite Cold Weather Disruptions
You Spin Me Round - Asian Supply Shortage, Spot Cargoes Lead to Record U.S. LNG Exports
Talk about whiplash! Not that long ago, the global LNG market was reeling from the effects of the pandemic: stunted demand, severe oversupply, brimming storage, and record low prices, all of which led to a squeeze on offtaker margins and mass cancellations of U.S. cargoes. Within a matter of months, however, the market has done a 180. Global supply has tightened significantly as cargoes can’t get delivered fast enough, and international LNG prices are near two-year highs. U.S. LNG exports and domestic feedgas demand are at record highs in December, for the second straight month. That’s not to say U.S. LNG producers and the domestic gas market are out of the woods. Cancellations are rearing their heads again — not because the demand isn’t there, but because of logistical constraints and a severe vessel shortage, which are injecting more uncertainty into the market. Today, we provide an update on domestic LNG exports and the immediate factors driving them.
Summertime - Low European Stocks, High Global Gas Prices to Keep U.S. LNG Production at Full Capacity
U.S. LNG export terminals are running at their operationally available and contracted levels and will continue to do so, with no economically driven cargo cancellations anywhere on the horizon. Global gas prices are well supported by low storage levels in Europe, and it will take time to refill inventories, which means these high prices are not going away anytime soon. The upshot: U.S. LNG will have a very different kind of summer than it did last year, when global prices were at historic lows and many U.S. terminals saw more cargo cancellations than exports. Feedgas in April this year averaged 10.77 Bcf/d, nearly 3 Bcf/d higher than last year, and as we progress into summer, the year-on-year delta will become even more pronounced. Barring any major operational issues, feedgas demand will stay around 11 Bcf/d, which is the level needed for the terminals to produce at full capacity. That’s in stark contrast to last summer, when feedgas demand cratered and averaged as low as 3.34 Bcf/d in July as cargo cancellations peaked. Today, we look at what’s supporting global gas prices, how that impacts export economics for U.S. LNG, and what that means for feedgas demand in the months ahead.
