Buyers of US LNG have cancelled more cargoes scheduled for loading in July amid persistently weak global demand. Trading sources said at least 45 LNG cargoes for July loading have been cancelled, roughly double the June cancellations. They also noted that at least half of the cancelled cargoes are tied to Cheniere Energy’s two terminals in the US Gulf Coast.
Market participants attributed the cancellations to low international prices and weaker-than-normal demand due to the coronavirus pandemic. Benchmark spot LNG prices for North Asia continued to decline to $2.125/MMBtu on Thursday, 4.8 cents/MMBtu lower than the previous day, dragged by ample cargo availability. In Europe, benchmark spot prices settled $0.134/MMBtu lower than a day before at $1.371/MMBtu on Thursday.
The cancellations mean US liquefaction terminals would take less gas. This week, gas intake by US liquefaction plants fell to its lowest since October last year. Falling feedgas flows can create a domino effect that will likely impact US midstream operators and shale gas drillers. Some traders also expected that prices would face further pressure.
