NEW YORK, Oct 1 (Reuters) - Liquefied natural gas imports to the United States were expected to slide further in October, as steady demand from the Far East and early buying from Europe soak up more spot supplies, according to estimates by a Houston-based consulting firm.
“Our latest September LNG import assessment has been downsized ... while October estimates have been revised (downward),” “ Waterborne Energy said in its latest report.
Waterborne Energy, a consulting firm that monitors the global flow of liquefied gases, estimates that U.S. LNG imports in September totaled some 45 billion cubic feet, about half the 89 bcf shipped here in August and down from an estimate last week of 50 bcf.
The report said a canceled Algerian cargo to the Cove Point terminal in Maryland in September was partially responsible for the reduction in imports last month,
Estimates for October were also revised down slightly to about 45 bcf from 47 bcf last week, but further reductions were possible if European buying continues to pick up.
Cool temperatures in Britain have driven natural gas prices there to near $9 per mmBtu, while a mild autumn in the U.S. has left Henry Hub prices languishing in the $6 area.
With the cost to ship LNG from Trinidad to Europe running only about 40 cents more than to the United States, more spot cargoes were likely to be diverted this month.
Waterborne said it expects U.S. LNG imports in November to fall to the 33 bcf to 46 bcf range as real demand from Europe kicks in.
In the meantime, a profitable arbitrage to the Far East should continue to siphon potential spot supplies away from the United States.
Landed gas prices in Japan were running in the $12 per mmBtu area last week, while the incremental cost to ship LNG there from Trinidad was only about $2.20.
Demand from Asian countries typically picks up at this time of year due to stockpiling for winter, but the shutdown in July of Japan’s largest nuclear plant has added to the increase.
While Japan has locked up much of its requirements through December, China, South Korea, India and Taiwan were all seen as potential buyers of spot LNG supplies, Waterborne said.
Both Europe and Asia are more dependent on LNG to meet heating and cooling demand and usually pay up for added supplies, while the United States, one of the world’s largest natural gas producers, can fall back on existing domestic reserves.
With U.S. gas inventories still hovering near record highs and likely to hit an all-time high near 3.5 trillion cubic feet by winter, industry sources said there was even less need for extra supplies in the United States right now.
Shipments of LNG to the United States set a record for the first half of the year, totaling some 464 bcf or 2.56 bcf per day, because of high U.S. gas prices early in the year.
U.S. LNG imports in 2007 are likely to hit a record above 800 bcf, or 2.2 bcf per day, up about 37 percent from last year’s total of 584 bcf, or 1.6 bcf per day.