LNG tanker may deliver gas to U.S. with European stockpiles near full

A ship carrying liquefied natural gas from Nigeria is in the middle of the Atlantic Ocean and heading northwest and may drop its cargo in the United States. The ship, Madrid Spirit, does not have a destination listed on vessel tracking data from Refinitiv.

Its travel has slowed in the past week or so, suggesting it may be searching for a home. A unit of Royal Dutch Shell Plc chartered the ship, according to people familiar with the matter.

The United States, which is the world’s third biggest LNG exporter behind Australia and Qatar, does not receive a lot of LNG imports, but they do occur. There were 21 LNG deliveries to the United States last year, mostly from Trinidad, while the U.S. exported more than 500 cargoes.

Madrid Spirit left Nigeria around May 25, as natural gas prices at the Henry Hub in Louisiana were higher than European hubs like the Title Transfer Facility (TTF) in the Netherlands and the National Balancing Point (NBP) in the United Kingdom.

Gas prices at TTF and NBP dropped to all-time lows last week as weak demand due to the coronavirus and record stockpiles pressured producers to cut supply. This week, TTF and NBP prices soared by around 60% as cooler weather boosted heating demand, pushing the European benchmarks over Henry Hub for the first time since late April.

The combination of higher U.S. gas prices and coronavirus demand destruction prompted buyers to cancel dozens of U.S. LNG cargoes for delivery in June and July.Energy traders said LNG buyers will keep canceling U.S cargoes this summer but likely not by as much as previously thought now that gas is more expensive in Europe.