New England winter pure gasoline costs high $40 as international LNG market tightens

Costs surge at Algonquin city-gates, Iroquois Zone 2

TTF trades close to $50 on robust European demand

New England imports 17.8 Bcf of LNG, winter 21-22

Winter gasoline costs in New England are hitting file highs in current buying and selling because the import-reliant area prepares to compete for LNG cargoes in a world market beneath stress from robust demand in Europe.

At Boston’s Algonquin Gasoline Transmission city-gates hub, peak-winter gasoline costs for the upcoming season have greater than doubled because the begin of this 12 months. In current buying and selling, the December 2022 contract settled at a brand new excessive of over $34/MMBtu with the January 2023 contract now priced at a file excessive of over $40/MMBtu.

At Iroquois Gasoline Transmission Zone 2 in upstate New York—which generally costs up throughout winter to drag japanese Canadian gasoline into New England—the runup has been related in magnitude with peak-season costs now buying and selling within the $30-$40/MMBtu vary, information from S&P International Commodity Insights exhibits.

Report winter costs in New England’s gasoline market come because the supply-constrained area appears to be like to buy LNG cargoes for the upcoming season. This winter, attracting cargoes within the Atlantic Basin market might show tougher as jittery patrons in Western Europe transfer aggressively to fill storage inventories forward of subsequent winter amid rising uncertainty over gasoline provide from Russia.

Onshore gasoline costs at Europe’s benchmark TTF hub are actually buying and selling at near $50/MMBtu. Within the international LNG market, winter cargo costs are solely barely decrease, buying and selling at round $41-$42/MMBtu.

LNG imports

Traditionally, New England’s gasoline market has confronted publicity to international LNG costs in the course of the peak winter heating season because the area depends on cargo imports to assist overcome pipeline constraints and deliverability limitations that make it difficult for piped gasoline to succeed in end-users. The one distinction this winter is that New England utilities and different clients can pay high greenback for provide.

Final winter, New England imported six LNG cargoes from November to March carrying the regasified equal of about 17.8 Bcf, Platts Analytics information exhibits.

Throughout winter 2020-2021, the area’s two import terminals—Everett LNG and Northeast Gateway—imported the same amount of about 17.3 Bcf over the identical five-month interval. However in simply the previous 5 years, New England at instances has imported considerably extra—upward of 30 Bcf throughout a single heating season.

This winter, Platts Analytics is anticipating stronger demand from the residential-commercial sector within the US Northeast, doubtlessly fueling one other uptick in LNG imports to New England.

Whereas the Northeast contains states past New England and as far south as Kentucky and Virginia, a few of this season’s anticipated uptick in demand would nonetheless possible come from the smaller, six-state sub-region stretching from Connecticut to Maine.

From November by means of March, houses and companies within the Northeast are forecast to eat a mean of 14.1 Bcf/d, or about 700 MMcf/d greater than the residential-commercial sector did final winter. If correct, it might make for the area’s strongest heating-demand season on file since winter 2018-2019.