A salvage team on Monday finally dislodged the massive container ship that’s been stuck in the Suez Canal for nearly a week, clearing a path for hundreds of vessels to begin transiting the crucial waterway.
Aided by the tides, nearly a dozen tugboats refloated the 1,312-foot-long Ever Given which slowly made its way through the canal toward the Great Bitter Lake for inspection after the ordeal. About 367 vessels were waiting to transit the canal, according to canal services firm Leth Agencies. Sixteen LNG tankers were part of the backlog, which will now take time to clear.
“The market will soon realize that despite the positive news, even if Ever Given leaves the Canal within days, some leftover downstream ripple effects should be expected in the meantime,” said Rystad Energy Oil Markets Analyst Louise Dickson. “Oil loadings, as well as some oil demand could be affected as manufacturers may have to close or pause production as they wait for delayed goods to arrive at plants.”
Commodity prices fell on Monday when word broke that Ever Given was free. European natural gas prices declined. Meanwhile, Brent crude was down in early trading, but climbed back and finished higher across the curve as the market turned its attention to the potential shipping delays that are likely to be caused by the incident.
While the blockage helped to support global gas prices last week, it had no meaningful impact as the LNG spot shipping market wasn’t affected and demand in the northern hemisphere is declining as spring gets underway, according to shipbroker Braemar ACM.
The prompt Title Transfer Facility contract moved sideways most of the week, but finished higher Friday at $6.380/MMBtu. The National Balancing Point gained 16 cents for a stronger close at $6.331 as concerns over congestion at the canal stretched into the weekend. Europe is most reliant on the canal for LNG imports.
Japan Korea Marker futures also climbed slightly to $6.930 and spot prices were stable in Asia on Monday at below $7.00 as supplies remained sufficient there.
Some LNG vessels diverted for the longer route around the Cape of Good Hope in the days after Ever Givenran aground in the canal on March 23. U.S. exports, which typically transit through the Panama Canal for Asia, were not impacted. Qatari and Russian exporters rely more on the canal as do portfolio players such as Royal Dutch Shell plc and Total SE.
The congestion came as European LNG imports have been steadily climbing as inventories were depleted this winter amid strong Asian demand that’s waning. Tudor, Pickering, Holt & Co. (TPH) expects European imports to average 12.7 Bcf/d in the second quarter, up from 10.7 Bcf/d at the same time last year.
But European storage remains 13% below the five-year average and 46% below year-ago levels, TPH said. The firm said even record summer imports are unlikely to adequately refill inventories on the continent, setting the stage for a tighter global market this year and next.
In North America, Cheniere Energy Inc. said it has completed commissioning the third train at its Corpus Christi LNG export terminal in South Texas. Cheniere’ engineering, procurement and construction partner has turned over control of the train to the company. The third train has a capacity of 4.5 million metric tons/year (mmty), bringing total output at the terminal to 15 mmty.
Elsewhere, dozens of people were reportedly killed during violence in Mozambique in recent days. Islamist militants reportedly raided the northern coastal town of Palma, near Total’s $20 billion LNG export project. The company suspended plans to restart construction after the latest attacks, which have occurred repeatedly in the region.
The Mozambique LNG project was sanctioned in 2019. It includes developing the Golfinho and Atum fields offshore Mozambique and constructing a two-train liquefaction plant with a planned capacity of 12.9 mmty.