Oil & Gas
Added Jan 18, 2021

US LNG Exports Hold Strong, Down from December’s Record Pace

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US LNG producers are enjoying what is expected to be a short-lived bonanza as the confluence of depressed international liftings and colder than normal weather in Asia Pacific has recently boosted prices and arbs across gas markets.

US December LNG exports soar

December was a banner month for US LNG producers as they exported 6.24 million mt to international markets, an all-time record. January is shaping up to be a strong month, with 3.97 million mt of exports already in our tally, though loadings so far this month are behind December’s torrid pace.

 

US LNG Exports split by Trading Region (mt)

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Our data show that global LNG liftings for December were 32.42 million mt, down 4.5% YoY.
Surging US LNG production in December was hitting a tightly supplied market, making the US barrels that much more valuable and incentivizing further exports.

Asia’s demand crunch

A colder than normal start to winter in Northeast Asia drove up regional gas prices and even led to electricity conservation efforts in Japan as utilities scrambled to find sufficient fuel for heating and electric demand. Further, South Korean importer Kogas sales to domestic consumers hit a three-year high in December on the back of similar conditions.

Taken together, shorter supply and stronger demand have driven prompt prices much higher in recent weeks, with Asian benchmark prices surging to all-time highs.

But considerable backwardation in pricing, especially in oil-linked deals, suggests the euphoria in spot markets may not last into the coming weeks.

Our roster for LNG liftings from US facilities the week ending January 22 shows just over 900,000 mt of departures, and this figure has been trending down since peaking north of 1.7 million mt in the week ending December 11.

 

 

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