Tariff tensions return and likely to foster trading - Rystad Energy’s Gas and LNG Market Update

A potential supply glut in the Atlantic could be on the cards as global LNG flows are increasingly directed towards Europe.

Asian spot liquefied natural gas (LNG) prices for March rose 9% over the week to $15.1 per million British thermal units (MMBtu) on 4 February.

The rise can be attributed to updated forecasts of colder weather in Japan and higher gas prices in Europe.

Meanwhile, European pipeline gas Dutch Title Transfer Facility prices for March climbed 8% week-on-week to $15.9 per MMBtu on 4 February, attracting LNG cargoes from other regions, which will likely be a headwind for additional price gain momentum.

In the US, weather forecasts vary by region, but feedgas levels to US LNG projects remain healthy, tightening domestic fundamentals.
Asia

Asian derivatives prices for April went up 5.7% week-on-week to $15.1 per MMBtu, with liquidity recovering to 928 lots on the Inter-Continental Exchange on 4 February, a 6.5-fold increase from just 143 lots a week earlier.

Fundamentals remain weak, and buying activity is limited in Asia amid the Lunar New Year holiday season, with some traders based in Singapore expressing concerns about weak demand in China.

In the LNG spot market, Thailand’s PTT is seeking three March delivery cargoes, with bids due on 6 February.

Meanwhile, Bangladesh did not fulfill its 27-28 February or 5-6 March delivery requirements as the offer levels received were higher than anticipated.

Further down the curve, Japan’s Inpex issued a tender seeking a 21-25 May delivery to Japan, which closed on 4 February.

LNG inventory held by major Japanese power utilities went up 12% week-on-week to 2.41 million tonnes (Mt) as of 2 February, which is higher than the 2.18 Mt seen for both the February 2024 and five-year averages.

This storage level could fall countrywide as colder weather hits western Japan later this week.

However, Japan also has, on average, 30% more available nuclear capacity in February 2025 compared to February 2024, which could replace LNG-fired power plants as baseload.

Of the 14 restarted nuclear power plants, 13 are located in western Japan.

In the long-term, Shikoku Electric announced plans to build the 600-megawatt (MW) unit 5 at its Sakaide gas-fired power plant in west Japan’s Kagawa prefecture.

This plant is likely to have 63% generation efficiency which would require approximately 45,000 tonnes of LNG each month.

Shikoku Electric imports more than 90% of its LNG from Malaysian state-run energy giant Petronas, typically via its long-term contract which began in 2010 and lasts for 15 years until March 2026, assuming the contract is not extended.

As most US-origin LNG is pointed to Europe under the closed arbitrage environment, market participants expect China’s announcement of an additional 15% tariff on US LNG to have a limited short-term effect on the LNG market.

However, this may trigger Chinese long-term contract holders to heavily engage in swapping out their US-origin LNG to other regions as they did in 2019-2020.

US volumes account for approximately 10% of China’s contracted volume in 2025, and there could be an opportunity for more volumes from other major LNG exporting regions, such as Australia and Qatar.

Elsewhere, Oman LNG is offering three cargoes for March and April delivery, while Adnoc was offering one LNG cargo for delivery between the second half of March and 3 April.

Europe
Northwest Europe LNG delivery for March increased 6-7% week-on-week to approximately $15.2-15.3 per MMBtu on 4 February, with prices peaking at $15.7 per MMBtu on 3 February.

Europe continues to pull LNG from other regions as prompt storage levels have fallen to approximately 52% on 3 February, compared to 37%, 71%, and 69% on the same day in 2022, 2023, and 2024, respectively.

Charter rates in the Atlantic are witnessing historical lows, with recent two-stroke carriers fixed at rates as low as $2,000 per day in the week of 27-31 January.

Meanwhile, German terminal operator DET was offering regasification slots at the 5.8 million tonnes per annum Brunsbuttel and Wilhelmshaven 1 terminals.

Norwegian pipeline gas flows to Europe remained at around 323.8 million cubic meters per day on 1 February, barely changed from a week earlier. However, gas production was reduced at the Asgard, Njord and Sleipner fields until at least 5 February.
US
Henry Hub March prices traded 4.2% higher week-on-week at $3.3 per MMBtu on 4 February, with feedgas levels to US LNG projects remaining strong at around 15 billion cubic feet per day (Bcfd) since 31 January.

Colder days are expected in some regions, such as the Pacific from 5-12 February and the Mountain region from 7-19 February.

However, supply is expected to rebound this month, averaging around 106 Bcfd, which is higher than the 102-103 Bcfd seen in January 2025.

Tariff threats and the potential for reduced imports from Canada supported prices this week.

The US imported approximately 5% more gas from Canada in 2024 than in 2023.

US President Donald Trump agreed to pause the tariffs on his nation’s two neighboring countries for 30 days.

While they are currently on hold, they are not off the table completely, meaning they are likely to continue impacting prices in the short term.

Additionally, storage withdrawals reported on 30 January were higher than market expectations.

The withdrawal of 321 Bcf pushed inventories below the five-year average.