The tankers are carrying a combined $2 billion worth of natural gas and are slowly sailing through northwestern Europe and the Iberian peninsula.
More than 30 liquefied natural gas (LNG) tankers are sitting idle off the coast of Europe, the Financial Times reported, as traders expect higher market prices.
According to shipping analytics firm Vortexa, the ships are carrying a combined $2 billion worth of LNG and are slowly sailing through northwestern Europe and the Iberian Peninsula.
“LNG carriers have been queuing outside European LNG receiving terminals, chasing what they hoped would be the premium market for this LNG,” Felix Booth, head of LNG at Vortexa, told the newspaper.
“For now, these ships have an incentive to hold positions” in anticipation that colder weather will increase energy demand and, in turn, push up prices, he said.
Another 30 ships sail the Atlantic and are expected to join the tankers before winter, Vortexa data showed.
LNG tankers in European waters have doubled in the last two months, as European countries filled their storage tanks almost to the limit ahead of winter.
In response to Western sanctions over its invasion of Ukraine, Russia has cut gas supplies to some European countries.
In turn, these countries bought LNG as a substitute, but unusually warm temperatures have led to a reduction in heating demand, which in turn kept storage sites full and prices lower.
State of ‘contagion’
Natural gas prices in Europe have retreated from their peak in August, when they topped 346 euros ($343) per megawatt-hour.
But traders who keep their tankers offshore are counting on prices rising in the coming months, as colder weather arrives and demand for heating rises, freeing up gas from storage.
This has led the market to be in a state of “contango”, where future delivery prices trade higher than spot prices, the FT said.
A similar situation involving the oil industry occurred during the height of the coronavirus pandemic, when a glut of crude oil caused traders to keep their oil on ships as floating storage, hoping prices would rise again.
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