More than 30 tankers holding liquefied natural gas (LNG) are floating just off Europe’s shoreline as energy traders bet the autumn price reprieve prompted by robust supplies and warm weather will prove to be fleeting.
The ships, which are hauling $2 billion combined worth of LNG, are idling or sailing slowly around north-west Europe and the Iberian peninsula.
The number of LNG vessels on European waters has doubled in the past two months.
The traders who control the tankers are holding out for higher prices in the coming months, when temperatures cool over the winter and the glut of natural gas in Europe’s storage now begins to be drawn down. Another 30 vessels are on their way, currently crossing the Atlantic and expected to join the queue ahead of the winter.
The queue has come as European countries have filled their storage tanks to near their limits ahead of the winter. This has been achieved through voracious purchases of LNG to substitute for Russian gas that has been cut off in retaliation for western sanctions.
As of end of October, European storage sites were at 94% capacity, with Belgium reaching 100%, France 99%, and Germany 98%.
The freight cost from the US Gulf Coast to north-east Asia was assessed at $478,000 a day and to north-west Europe at $468,000 a day at October 31. Both are record highs and twice the price compared to a year ago.