The tankers carry a total of $2 billion worth of natural gas and are slowly sailing around northwestern Europe and the Iberian Peninsula.
More than 30 tankers carrying LNG are slowing off the European coast, as traders wait for market prices to rise, the Financial Times reports.
According to shipping analytics firm Vortexa, the ships are carrying $2 billion worth of liquefied natural gas, slowly sailing around northwestern Europe and the Iberian Peninsula.Read:If Australia wants to mend relations with China, we must stop viewing it as the enemy | David Brophy
“LNG vessels have been queuing outside European LNG receiving terminals, chasing what they expected to be the premium market for this LNG,” Felix Booth, head of LNG at Vortexa, told the newspaper.
“Right now, these ships have an incentive to take positions,” he said, in anticipation that the colder weather would increase energy demand and thus raise prices.
Data from Vortexa showed that another 30 ships are sailing across the Atlantic and are expected to join the tankers before winter.
LNG carriers in European waters have doubled in the past two months, as European countries filled their storage tanks to get closer to their borders before winter.
In response to Western sanctions for its invasion of Ukraine, Russia reduced gas supplies to some European countries.Read:The funny things women did in 1958 trying to find a husband
In return, these countries bought LNG as an alternative, but unusually warm temperatures lowered heating demand, which in turn kept storage sites full and prices lowered.
Natural gas prices in Europe have retreated from their August highs, when they topped 346 euros ($343) per megawatt-hour.
But merchants who keep their tanks abroad are counting on price increases in the coming months, as cold weather sets in and heating demand increases, releasing gas from storage.
This has resulted in the market being in a “contango” state, the FT said, with future delivery prices trading higher than spot delivery prices.Read:Volodymyr Zelensky hits back at Elon Musk after he tweets his ‘peace’ plan for Ukraine
A similar situation occurred for the oil industry at the height of the coronavirus pandemic, when a surplus of crude oil kept traders on board ships as a floating storage, waiting for prices to rise again.