Despite continuing lack of progress towards any sort of enduring peace arrangement between the US and Iran, UK gas prices have remained relatively stable over the last week. Heading towards the delivery period for May 26, gas for the month traded between 113p/th at open on 23rd April, and 110p/th at open on 29th April, with relatively little volatility in the intervening sessions. Power for the month also saw limited movement, remaining between £88/MWh and £92/MWh over the same period.
Despite the reduced availability of LNG volumes at sea during the war, and weak commercial incentives to inject gas into storage, European gas storage fullness ticked up to 32%, aided by warmer temperatures and ongoing below-average gas demand. Inventories across the continent remain near historic lows and Europe faces a challenging summer refill, with the German government continuing to have discussions about a potential strategic gas reserve as mitigation against potential tightness over winter.
Despite the restrictions in place in the Strait, LNG tanker Mubaraz, a Liberian-flagged tanker operated by the UAE’s ADNOC (Abu Dhabi National Oil Company), has signalled arrival in China. The vessel is apparently due to dock at Tianjin LNG on 14th May, having having previously been visible inside the Gulf before vanishing from tracking on 30th March. This would be the first delivery of an LNG cargo that had transited the Strait since the outbreak of war. Visibility is limited due to ships turning off transponders in the vicinity, but two other LNG tankers – Mraweh and Al Hamra – were last seen near the entrance to the Strait on 19th April. Should they make the crossing, this could potentially mark the restart of inbound and outbound LNG transits.
Providing some mitigation of global competition for remaining available LNG volumes, Chinese LNG imports are on course to set an 8-year low in April, with volumes for the month down 30% year-on-year. Lower Chinese LNG demand was already observed in prior to the war, with buyers relying more on cheaper, pipeline gas, with China also seeing higher coal burn, weak industrial demand and higher domestic gas production.
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