Mar 2020

Trend of Natural Gas and LNG Prices

Short-term trend

  • Assessed spot LNG prices in Northeast Asia (JKM) for delivery in next month recovered to above USD 3 per million Btu in early March 2020 from the historical low of USD 2.713 per million Btu on 14 February 2020, but still have been at the lowest level. JKM for April 2020 delivery, during its front-month period from the middle of February to the middle of March 2020, recovered from around USD 2.8 to USD 3.5. The prices for May delivery have been in the same range of around USD 3.5. The outbreak of the COVID-19 has caused a stagnation in the Chinese economy, and uncertainly in the LNG market has increased as some Chinese LNG importers reportedly declared force majeure on their offtake. However, recovering economic activities in some areas in China have led to gradual recovery of JKM prices. Meanwhile, the collapse of OPEC+ production coordination and declare of Saudi increasing oil production haven't been affecting yet to the LNG spot market. According to the latest figures of Japanese customs statistics, the average import price of LNG in February 2020 was USD 9.32 (USD 0.05 higher than January 2020) and the average spot LNG prices published by METI was USD 5.5 (USD 0.5 lower than January 2020).
  • While the Henry Hub price in the United States for delivery in next month went down by USD 0.16 in February 2020 to USD 1.68 at the end of the month. It has been below USD 2 since 20 January.The higher average temperature in February than normal (higher than the average from 1981 to 2010), steady gas production and economic uncertainty amid COVID-19 outbreak which has kept surpassing historical highs (34-straight-month year-on-year increase and the highest in the history at 96.5 bcf/d in February) have resulted in historic low prices. Meanwhile the NBP price in the United Kingdom in February 2020 declined by USD 0.37 to USD 2.80 equivalent at the end of the month. After the NBP price went down to USD 2.65 on 11 February 2020 due to the weakness of Asian demand since last year and outbreak of COVID-19, it only briefly recovered with Asian spot prices, largely staying below USD 3 in early March 2020.
  • Japan's average LNG import price of USD 9.32 in February 2020 was 1.76 times as high as the assessed spot LNG price in the region (JKM) for delivery in February 2020 (assessed between mid- December 2019 and mid-January 2020) at USD 5.30. The gap was higher than its in January and still in high levels. The average landed prices of LNG to Japan from the United States in February were USD 8.84 to undercut the overall average of USD 9.32. Meanwhile, most of long-term contract prices to buy LNG in Japan link to oil index except for LNG from the United States, therefore, the collapse of crude oil prices is expected to affect long-term contract LNG prices. As the crude oil prices imported into Japan are generally reflected in LNG contract prices three months later, the lower LNG prices are expected from July.

LNG and Spot Gas Prices, 2019-2020

Mid- to long-term trend

  • During the five-year period from 2014 to 2019, Japan's average LNG import price fell from the middle USD 16 to USD 17 per million Btu range, largely due to the downward trend in crude oil prices, to which long-term contract LNG prices are pegged. Except in August 2019, when it rose to USD 10.13, the average price has since April 2019 largely stayed below USD 10.
  • JKM declined from around USD 10 per million Btu for January in 2019 delivery to the middle of USD 4 for July - October 2019 delivery. After JKM for delivery from November 2019 to January 2020 briefly stayed at around USD 6, JKM declined dramatically to the USD 2s for March and April 2020 delivery. This is a historically remarkable decline to also a historically low level. After that JKM recovered gradually from the historic low level. JKM, which in recent years moved in the range between European spot gas prices at the lower end and crude oil equivalent at the higher end, stayed near the lower end in 2019. In addition, since June 2019 the JKM has largely been at the historic lows.
  • Japan's average LNG import price was 1.6 - 2 times higher than the average JKM for delivery in each month in the second quarter of the year, and was more than two times higher than the JKM from July to October, representing the largest relative gap between the two since 2011. This seems to be due to ongoing massive LNG supply capacity expansions mainly from the United States, and weaker appetite for LNG in Asia, especially from the traditional three LNG markets in Northeast Asia - Japan and Korea decreased LNG import by 6.7% and 7.7% respectively, while Chinese Taipei modestly increased LNG import by only 0.4% in 2019. Even in China, growth of LNG import was moderated from more than 40% in 2017 and 2018 to 12% in 2019.

LNG and Spot Gas Prices, 2015-2020

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Henry Hub price: NYMEX Futures and Options, CME Group
NBP price: ICE Futures Europe, Intercontinental Exchange
TTF price: ICE Futures Europe, Intercontinental Exchange
JKM: LNG Japan/Korea Marker© 2020 by S&P Global Platts, a division of S&P Global Inc.
METI spot price: Spot LNG Price Statistics, Ministry of Economy, Trade and Industry
Japan’s average LNG import price: Trade Statistics of Japan

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Trend of Natural Gas and LNG Inventories


  • Japan's LNG inventory as of the end of November 2019 stood at 5.15 million tonnes, an increase of 10.1% from the preceding month and an increase by 3.0% from one year earlier. The inventory surpassed the high levels of the same month in 2018, recording the highest in the last five years. LNG consumption for city-gas supply decreased by 11.1% month-on-month in November 2019, so the LNG inventory for city-gas supply in the month was 2.6 million tonnes, 12% higher than October 2019 and 6.4% higher than November 2018. This was largely because LNG imports for city-gas supply in November 2019 was 2.72 million tonnes, higher by 0.6 million tonnes or 28.3% month-on-month. The LNG inventory for incumbent electric power utility companies in November 2019 was 2.55 million tonnes and increased by 8.3% from October 2019 and 0.3% lower than November 2018, as gas-fired power generation output by incumbent electric power companies decreased by 0.5% month-on-month in November 2019.
  • Japan's LNG inventory levels have been generally high relative to the country's LNG consumption levels, as the country is almost entirely dependent on imported LNG for its natural gas supply. In Europe and the United States, there are many underground gas storage facilities, LNG inventory levels are relatively low compared to Japan. Assuming that LNG cargoes heading to Japan are counted on, additional 1.5 million tonnes should be added to the inventory volumes.
  • Moreover, more than 60% of LNG is used by electric power companies, who also have different sources of power production and use LNG more or less as backup sources to adjust gaps or surplus of their total power generation. In recent years, operational performances of the country's nuclear power reactors, as well as increasing power supply from renewable energy sources, have dramatically changed the operation of LNG inventories. This is why the total inventory levels at the end of November 2018 and 2019 reached almost 5 million tonnes.

Japan end of month LNG inventory, 2014-2019

Japan end of month LNG inventory, 2018-2019

Compiled based on data from Gas Business and Thermal Power Generation Statistics, Ministry of Economy, Trade and Industry.

United States

  • As of 6 March 2020, working gas in underground natural gas storage in the United States was 2,043 Bcf , an 18.1% decrease in one month, according to data from the U.S. Energy Information Administration (EIA). Although gas inventories decreased from the previous month due to the winter demand season, they increased by 71.7%, 853 Bcf compared to the same period in 2018. And they were 227 Bcf higher than the past five-years average of 1,816 Bcf.
  • According to the Short-Term Energy Outlook released by the EIA in March 2019, EIA forecasts that the working natural gas in storage will be 12% higher than the past five-year average and 1,920 Bcf at the end of March. This was due to the mild winter temperatures and continuing strong production. In addition, the EIA forecasts that the working natural gas in storage will be 3,971 Bcf because of natural gas injection during the natural gas restocking season (April - October).
  • Underground natural gas storage facilities in the country generally inject more gas in summer starting in April and send out more gas in winter starting in November. Those trends have been created by the need to use more gas in heating in winter and by commercial motivations to buy gas cheap in lower demand periods between April and October and sell at higher prices in winter peak demand periods. Those trends have in recent years, however, to some extent been moderated by increasing use of natural gas in power generation, particularly in summer peak periods, increasing LNG exports, and increasing gas exports by pipeline to Mexico, with the inventory peak declining in 2017 and 2018. In 2019, LNG storage volumes have increased as growth in domestic gas production has offset increasing consumption and exports.
  • Last 5 years, no new natural gas storage facilities began operating.

U.S. Natural Gas Underground Storage, 2015-2020

U.S. Natural Gas Underground Storage(Mar 2019-Mar 2020)

Compiled based on data from the U.S. Energy Information Administration (EIA)


  • As of 14 March, 2020, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) member companies of the European Union (EU) was 627 TWh or 13.5% lower than one month ago, reflecting the winter gas demand. But the level was still 182 TWh or 40.9% higher than one year earlier, and 286 TWh higher than the five-year average, and for the highest in history. The stored volume represented 57% on 14 March 2019 of the working capacity, coming down from 97.6% on 4 November 2019, the highest occupancy ever in the history of the storage statistics, still staying significantly higher than the past five-year range of 25% - 40% at the time of the year.
  • The largest contributors to the increase of stored volumes include the growing imports of LNG into the European region starting in the third quarter of 2018 and the decrease of winter heating gas demand in Europe.  European operators were actively using storage facilities in hopes of buying LNG cheaply before the winter demand season and selling it expensively in winter. However, due to the weak gas demand European gas stocks have not found many places to go, resulting in the high stock ratio.
  • During the slightly longer than five-year period from the end of August 2014 to the end of November 2019, the gas storage capacity of AGSI in Europe increased by 16% from 954 TWh to 1,109 TWh as of the end of February 2020.
  • Those storage facilities generally inject more gas in summer starting in April and send out more gas in winter starting in November, with storage levels going up to 80% or more than 90% of the working capacity at the end of injection period. Storage levels go down to 20% - 30% at the end of the withdrawal period. However, in recent couple of years, fluctuations in stored volumes have increased partly because of extreme weather conditions as well as commercial motivations of shippers of those gas storage facilities. The extreme winter cold of early part of 2018 drove down the total storage level to 18% at the end of March that year. The flood of LNG volumes imported into the region starting from the latter half of 2018 has increased volumes in gas storage in summer and autumn 2019, to nearly full capacity. The occupancy rate continued being high even during the winter withdrawal season.

European Natural Gas Storage, 2015-2020

European Natural Gas Storage, Mar 2019-Mar 2020

Compiled based on data from Gas Infrastructure Europe, Aggregated Gas Storage Inventory (AGSI). The 5-year range and average figures in the graphs do not mean the full 5 years storage amount because only data since January of 2011 is available.