S&P Global Commodity Insights First Take

S&P Global Commodity Insights First Take

5/21/2025, 11:33:57 AM

FIRST TAKE: Emerging case for US natural gas production curtailments BULLISH for summer Henry Hub prices Luke Larsen *Surging incentives for near-term supply management by producers could tighten US near-term gas market *Recent patterns in monetization efforts show producers can adjust supply levels when market is out of balance *Aggressive selloff in the front of Henry Hub curve widened June’s discount to Winter 2025-26 to almost $1.25/MMBtu The pullback in US natural gas futures last week had further blown open a prospective economic window, allowing for a renewed market balancing effort that could reshape the Lower 48 production profile in the weeks ahead. This bullish spin comes as Henry Hub spot prices have struggled to find traction above $3.25/MMBtu during the first half of May. With the June Henry Hub expiration just over a week away, operators are eyeing the opportunity to potentially monetize any residual production flexibility amid a widening discount or contango value for the upcoming winter. As recently as May 16, the US natural gas commodity continued to exhibit a lucrative forward carry environment -- characterized by much higher values during the upcoming heating season -- which had widened to almost $1.25/MMBtu for the June Henry Hub contract. Only a week earlier, that value had been 98 cents/MMBtu May 9. However, spot price weakness throughout May, along with multiple weeks of massive storage injections exceeding 100 Bcf each, allowed the contango-shaped discount in the forward curve to extend into an even more lucrative territory as the end of the month approaches. While current Lower 48 production levels have consistently flirted with record daily and monthly levels in recent weeks, spot prices have suffered considerably during a relatively mild start to the US summer cooling season. Additional widening could occur in the days ahead, as physical market struggles are expected to potentially peak over the upcoming US Memorial Day holiday weekend. Read on PlattsConnect: https://tinyurl.com/4f2c4sbf

S&P Global Commodity Insights First Take

5/21/2025, 5:35:40 AM

FIRST TAKE: LNG Canada project start-up BEARISH for Asian spot LNG prices Eric Yep *Petronas CEO says first cargo expected in a matter of weeks for Asian market *Project start-up in time to meet peak Asian summer demand season *West coast North America-Asia route cuts voyage days and shipping emissions LNG Canada’s imminent start-up will be BEARISH for Asian spot LNG prices as its cargoes are targeted at markets in this region and the first supply trance will be just in time to meet peak summer season demand. Shell-operated LNG Canada, with a designed capacity of 14 million mt/year, is expected to ship its first cargo in a “matter of weeks” according to project partner Petronas’ CEO Tengku Muhammad Taufik’s comments at the World Gas Conference in Beijing this week. The project is Canada’s first foray into LNG exports, and it opens up the direct Pacific route from the west coast of North America to Asia. The voyage to North Asia is around 11-12 days, less than half of the 30-plus days for US Gulf Coast LNG around the Cape and 20-plus days via the Panama Canal. This not only cuts shipping costs but reduces Scope 3 transportation emissions by more than half for importers like Japan, South Korea and China. Canadian LNG will have a displacement effect in Asian markets that pushes out Atlantic basin volumes, some Mideast LNG and flexible US Gulf Coast LNG into Europe; and competes with local suppliers like Australia. LNG Canada’s main offtakers are Shell, Petronas, PetroChina, Mitsubishi and KOGAS, and initial offtake will be aligned with equity stakes. Petronas has said it had sold some LNG Canada volumes linked to the Canada Alberta Energy Company (AECO) index that also introduces a new LNG price indexation to the market. Read on Platts Connect: https://tinyurl.com/275ffr9r

S&P Global Commodity Insights First Take

5/23/2025, 4:31:55 PM

FIRST TAKE: Trump's threat of 50% EU tariff BEARISH for TTF gas price *Trump expresses frustration with EU trade talks, recommends 50% tariff across the board, effective June 1 *The threat is a negotiating tactic, but it will be difficult for the EU to respond quickly with meaningful concessions *If imposed or not, it adds near-term risk to EU economic prospects and could impact European gas demand *EU tariff retaliation on US LNG is extremely unlikely US President Donald Trump's suggestion of a 50% tariff on all EU trade had an immediate but fleeting impact on natural gas markets May 23. The TTF MA price on ICE fell 3% on the news but recovered most of the decline in subsequent trading. The tariff threat remains BEARISH for TTF because trade tensions are back in focus, increasing economic uncertainty in Europe. The EU faces a unique challenge as it negotiates trade with the US. Trade and tariffs are an exclusive EU competence, and European Commission trade chief Maroš Šefčovič has full authority to speak for the EU on these issues. But EU tariffs on US goods have almost nothing to do with the trade balance. To the extent that the EU surplus is about policy rather than the structure of the two economies or consumer preferences, it relates to non-tariff barriers such as EU food safety rules. Most of these elements are “shared competences” and subject to EU rules that cannot be amended without a complex legal process involving the EC, the European Parliament, and member states. There is little a team of EU trade negotiators can credibly promise in many areas where their US counterparts may have grievances. Part of the EU negotiating strategy has been promising to buy more US LNG — something the EU hopes to achieve by phasing out Russian gas. This has obviously not been enough for Trump. It now seems unlikely that US tariffs on the EU will remain at 10% following the three-month tariff pause announced April 9. One point of relative certainty is that any EU tariff retaliation will not touch US LNG, since this would translate directly into higher energy costs in Europe. Read on PlattsConnect: https://tinyurl.com/y3anvbeb

S&P Global Commodity Insights First Take

5/23/2025, 3:29:09 PM

FIRST TAKE: Potential 50% US tariff on EU imports BEARISH for Dated Brent price   * Trump expresses frustration over lack of negotiating progress with EU and calls for tariffs beginning June 1 * Carve-out for oil-related imports would be likely, but any tariff that included gasoline would be BULLISH for PADD 1 gasoline cracks * Demand outlook remains BEARISH amid tariff uncertainty, but summer gasoline demand will broadly support gasoline cracks   US President Donald Trump’s May 23 Truth Social post announcing a potential 50% tariff on US imports from the European Union starting June 1 is BEARISH for global oil demand and thus prices. However, markets have so far taken it in stride with prompt ICE Brent up around 17 cents at $64.61/b in mid-morning US trading.   As with other recent tariff announcements, this should be seen as both a directional indication of policy intent and as a negotiating tactic. Given that the EU is the largest trading partner with the US, such a large tariff would probably be unsustainable. But some level of higher tariffs is likely.   Although summer gasoline demand will be supportive for the summer, our oil demand outlook remains bearish amid the general macroeconomic uncertainty surrounding tariffs. The 90-day reprieve on tariffs on imports from China should expire around Aug. 11.Weak consumer confidence and downgrades to global GDP outlooks will only be partly offset by lower prices.   James Bambino, Richard Joswick   Read on Platts Connect: https://tinyurl.com/mr2mb53k

S&P Global Commodity Insights First Take

5/27/2025, 5:34:55 AM

FIRST TAKE: Early monsoon arrival in India BEARISH for spot LNG prices, gas use in power Eric Yep *India’s southwest monsoon arrives earlier than usual, provides respite from heat *Relief from peak summer temperatures to cap gas demand in power generation *Idle RLNG-based power capacity may not need to be ramped up in 2025 Early arrival of monsoon rains in India is BEARISH for gas demand in power generation and spot LNG prices for summer as it will cap any major rise in summer temperatures and limit power consumption for air conditioning. The India Meteorological Department said May 24 that the southwest monsoon had set in over the southern state of Kerala earlier than the normal date of June 1. Media reports said this was the earliest onset in 16 years, and in some states, the earliest in 35 years. The early monsoon comes after reports of sporadic heatwaves in northern parts of South Asia, including provinces in Pakistan that saw temperatures exceed 45 degrees Celsius in May. India’s gas-fired power generation has been constrained with around 25 GW of capacity that is largely underutilized due to high feedstock prices, and there have been reports of consolidating some of this idle capacity. In mid-May, India’s Ministry of Power had issued directives to increase output from gas-based power plants from May 26 to June 30, in anticipation of a power crunch this summer, which may no longer materialize. In 2024, India’s average regasified LNG consumption for power was 20 MMscm/d during the peak April-June period, but this could be tempered for 2025 if the monsoon progresses smoothly and the remainder of summer doesn’t hold any surprises. Meanwhile, there are reports of heavy rains and flooding in parts of southern China, but it remains to be seen whether it will impact hydropower generation and LNG demand in the coastal regions. Read on Platts Connect: https://tinyurl.com/me8kyf5m

S&P Global Commodity Insights First Take

5/19/2025, 6:39:13 PM

FIRST TAKE: Lack of progress on Trump-Putin phone call NEUTRAL for TTF Laurent Ruseckas *The call does not appear to have resulted in tangible progress despite Trump’s optimistic comments *Cautious remarks from Putin make clear that Russia’s negotiating position has not changed *Possibility of peace agreement or ceasefire that could lead to return of Russian pipeline gas to Europe remains distant Following a two-hour phone call May 19 between US President Donald Trump and Russian President Vladimir Putin, Putin moved first to set the narrative with brief press comments that spoke of continuing with talks but showed no specific flexibility. Trump followed with more optimistic comments on social media, saying that negotiations between Russia and Ukraine “will begin immediately” but without details. Given that the TTF paper market no longer seems to reflect any expectation that Russian pipeline gas will return to Europe in significant volumes, the call is NEUTRAL rather than bullish for TTF prices. The fundamental barrier to a peace agreement remains the huge gap between the terms apparently endorsed by the US – based on an April 17 media leak – and terms that Russia would consider acceptable. Evidence suggests that Russia’s leadership continues to believe it has the upper hand both militarily and politically if the conflict drags on, and that it could manage the human and economic costs of ongoing war. Russia might make major concessions (although not in a phone call or even a Trump-Putin meeting) only if the US were to threaten devastating sanctions, for instance on Russian oil exports, or massively increased support for Ukraine’s military efforts. There is no sign either of these are being seriously considered. Next steps are unclear, although Trump’s focus on Russian-Ukrainian negotiations rather than a personal meeting with Putin may suggest that the US is beginning to disengage. If peace talks collapse, it no longer seems likely that the US would blame Ukraine exclusively. But we are not ruling out a scenario in which US sanctions on Arctic-2 LNG were lifted as part of US-Russia normalization even without peace in Ukraine. Absent a peace agreement, a return of medium-scale Russian pipeline gas to Europe will remain politically impossible. Read on PlattsConnect: https://tinyurl.com/35x3urez

S&P Global Commodity Insights First Take

5/16/2025, 9:17:46 AM

FIRST TAKE: Red Sea transit restarts seen BEARISH for LNG freight rates, Platts JKM *Trump said US bombing of Yemen and Houthi ship attacks have halted *Suez Canal Authority offers toll fee cuts to boost boxship traffic on Red Sea Route *LNG transits on some key trade routes could benefit from Red Sea reopening Any resumption of Red Sea transits for cargo ships will be BEARISH for Platts JKM prices and LNG freight rates as it will bring down transportation and optimization costs, and accelerate LNG deliveries that currently have to go around the Cape of Good Hope. Since US President Donald Trump announced a halt to US bombing of Yemen May 6 and claimed that Houthi rebels would stop attacking ships in the region, ship owners and charterers have been considering restarting Red Sea transits. The US side deal with the Houthis seems to reflect a current willingness to take regional actions that are not aligned with Israeli interests. Earlier in the week, Egypt's Suez Canal Authority offered to reduce toll fees for large containerships for 90 days as an incentive to resume Red Sea transits and stem steep revenue losses. Ship owners are still waiting for P&I Clubs to give the green light and remove war risk premiums. LNG freight rates are already near multiyear lows, and lower rates would trigger layups, more scrapping and fleet consolidation. However, certain routes, such as Qatar-Europe, US-India and Russia-Asia (via the Northwest Passage), could see average voyage times fall materially. On May 15, Platts reported Pacific day rates for TFDE carriers at $13,500/d and two-stroke carriers at $22,000/d. Read on Platts Connect: https://tinyurl.com/597pxv52