London/Singapore - Buyers of liquefied natural gas (LNG) are expected to cancel 40 to 45 cargoes for August loading from the United States due to a slow recovery in Asian gas demand and record high European gas stocks, market sources said on Monday.
The exact number of cancellations is yet to be confirmed as the deadline of some projects is on Monday, but six of the sources said they expected the number of August cancellations to be close to 40 to 45 cargoes, the same number that was cancelled for July loading.
That followed at least 20 to 30 U.S. LNG cargoes cancelled for June loading after the coronavirus pandemic hit gas demand globally, causing gas and LNG prices to plummet.
The premium of gas prices in Europe over the U.S. Henry Hub remains too tight to deliver U.S. cargoes with a profit, sources said.
The August contract on the Dutch gas hub was trading around $0.10 per million British thermal units above the Henry Hub for August on Monday.
“At those levels, European buyers are looking at a loss of over $5.00 compared with just paying a cancellation fee of $3.00-$3.50,” a trader with knowledge of the matter said.
Another trade source said that close to 30 cargoes were likely cancelled from Cheniere Energy’s plants, Sabine Pass in Louisiana and Corpus Christi in Texas.