Maritime market update: LNG prices retreat from all-time highs

Natural gas markets in Europe have been extremely volatile for the past two months. The Dutch TTF front-month-ahead gas price reached a historic high of 146.50 EUR/MWh in December 2021, leading to LNG cargoes changing their course and heading towards Europe. Northwest Europe LNG prices remain at a premium to the JKM price, increasing supply into Europe. However, persistent lower pipeline supplies from Russia and low inventory levels keep the price floor high. Risavika LNG index is at 94.67 EUR/MWh for March contracts.

Benchmark oil prices has been supported by geopolitical risks and short-term fuel switching, rather than by more sustainable demand increases. Four incidents threatened oil supplies only in January. Protests in Kazakhstan, pipeline outage in Iraq, attacks in the UAE and ongoing tensions between Russia and Ukraine led to Brent reaching over 90 USD/BBL. On top of that, about 80% of all European refineries depend on natural gas to power their plants, with refineries located in the big oil refining centers like Northwest Europe's Amsterdam-Rotterdam-Antwerp getting virtually all their power from natural gas. With natural gas prices staying elevated, there is a possibility for worsening cracking margins for refineries in Europe and tighter oil products supply as a consequence. Fuel oil 3.5 (FO 3.5) price is at 487.44 USD/t, low sulphur oil (MFO 0.5) is at 614.93 USD/t and marine gasoil (MGO 0.1) was trading at 753.58 USD/t for March contracts.

Front Month Price index
LNG Risavika*	LBG blend Risavika**	FO 3.5 FOB Rdam	MFO 0.5 FOB Rdam	MGO 0.1 FOB ARA	ULSD FOB ARA	Unit
94.67	97.67	34.95	42.22	51.74	56.14	EUR/MWh
1603.77	1654.59	487.44	614.93	753.58	783.03	USD/t

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LNG Risavika - LNG FOB Risavika

LBG Risavika 10 % - 10 % blend of Liquified Biogas

FO 3.5 FOB Rdam – European 3.5% Fuel Oil Barges FOB Rdam (Platts) Futures Quotes

MFO 0.5 FOB Rdam - European FOB Rdam Marine Fuel 0.5% Barges (Platts) Futures Quotes

MGO 0.1 FOB ARA - Gasoil 0.1% Barges FOB ARA (Platts) Futures Quotes

ULSD FOB ARA - European Diesel 10 ppm Barges FOB ARA (Platts) Futures Quotes

Source: CME Group, Gasum, Argus Media, S&P Global Platts

*An estimate for LNG FOB Risavika

** An estimate for 10 % LBG blend FOB Risavika