According to a report released today by the Energy Information Administration (EIA), U.S. liquefied natural gas (LNG) exports accelerated in the first half of 2021. Particularly, this resulted as colder weather drove LNG spot prices in Asia and Europe higher.
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Accordingly, the Agency said exports averaged 9.6 billion cubic feet per day (bcf/d) in the first six months of the year; indeed, up 42% from the same period a year ago.
The reasons behind this LNG export acceleration
Similarly, rising global LNG demand came once COVID-19 restrictions began to ease. Also, as continuous unplanned outages at LNG export facilities in several countries increased; for instance, in Australia, Malaysia, Nigeria, Algeria, Norway, and Trinidad and Tobago.
Thus, in Asia, colder-than-normal winter temperatures led to increased demand for spot LNG imports. Additionally, natural gas demand in the spring continued to rise amid low post-winter inventories, which contributed to unseasonably high natural gas prices.
Specifically, the high prices prompted a higher demand for more flexible LNG supplies, particularly from the United States.
On the other hand, in Europe, natural gas storage inventories were also low following a cold winter. Thus, increasingly hot temperatures in May and June and greater natural gas demand from the electric power sector contributed to high natural gas spot prices.
Following Outlook
Although Europe’s natural gas spot prices have historically been lower than prices in Asia; this year, Europe’s natural gas prices are tracking Asia’s spot LNG prices more closely to attract flexible LNG supplies from around the world; particularly, to refill storage inventories.
Also, the EIA said the price difference between the U.S. Henry Hub natural gas benchmark and international natural gas prices supported record volumes of LNG exports. Further, the organization added that exports also increased because of the new export capacity added in 2020.
In fact, U.S. natural gas futures surged to a 31-month peak earlier this week. In contrast, European and Asian gas contracts are trading over $12 and $14 per mmBtu, respectively.
Lastly, EIA projected that in July, exports would rise to 9.56 bcfd in 2021 and 10.15 bcfd in 2022 from a record 6.53 bcfd in 2020.
