About 30 vessels are sailing across the Atlantic and are also expected to join the tankers, data from Vortex reflect.
Per a well-known shipping analytics firm named Vortexa, the vessels are reportedly transporting a cumulative worth of $2 billion of LNG. They are slowly sailing when close to northwestern Europe and the Iberian Peninsula.
The vessels are now incentivised to hold their positions, particularly in anticipation of the impact the colder weather may have. It is expected that the energy demand will increase, driving up prices.
Over 30 tankers loaded with liquefied natural gas (LNG) are idling off Europe’s shoreline, the Financial Times informed, as traders are holding out for increased market prices.
The number of LNG tankers in European territorial waters has doubled over the past two months as European nations fill the storage tanks to near capacity before winter.
In response to the Western sanctions for the invasion of Ukraine, Russia has lowered gas supplies to selected European nations.
In return, the countries purchased LNG as a substitution, but warm temperatures have lowered the heating demand, which kept the storage sites full and the rates falling.
The price for natural gas in Europe has reportedly fallen back from August highs as they topped 346 euros per megawatt-hour.
But traders who keep tankers offshore are counting on increasing rates in the months ahead as cold weather sets in and lifts the heating demand, releasing the gas from storage.
This has resulted in the market being in a state of “contango”, where the rates for delivery in the future are trading significantly higher than what’s needed for immediate delivery, the FT informed.
A similar situation involving the oil industry took place during the height of the COVID-19 pandemic, when excessive crude resulted in the traders keeping oil on the vessels as floating storage, waiting for prices to rise again.
References: Aljazeera, Markets Insider, Financial Times