LNG Supplies Redirected Toward Europe Due to High Shipping Costs
The high cost of shipping has led to a redirection of U.S. liquefied natural gas (LNG) supplies toward Europe, where freight costs are lower.
The Atlantic-Pacific arbitrage is closed for the rest of this year due to these high shipping costs, causing most spot cargoes from the U.S. Gulf Coast to head towards Europe instead of Asia.
According to data by Bloomberg, deliveries to Europe have been only 4% lower than a year ago over the past month, compared to a 30% annual decline in LNG deliveries to Europe in early August.
This shift could provide relief for Europe's gas supply concerns ahead of winter, as EU gas storage sites are currently at just 70% capacity, well below the five-year average of 86% for this time of year. Germany's vast storage is particularly low, sitting at around 57% full.