A sharp 21% build in LNG sitting in tankers in October highlights how little spare gas storage space remains globally, as well as the knock-on effects from very weak global demand, as highlighted in a recent LNG scorecard.
The activity on the water is clearly being supported by the sharp price contango experienced across 4Q, which encourages ships to wait until November to discharge.
Not all this volume is being flagged as floating storage, which is also elevated to nearly 30 vessels.
The incremental surge in supplies on the water is being dominated by volumes from Australia (26%), the US (25.5%), Malaysia (17%), and Nigeria (8%). Australia is surprising, given that its volumes are not as exposed to spot markets as some other suppliers. Some of the Australian volumes may relate to Northwest Shelf returning from maintenance.
Notable players that are not contributing are Russia and Indonesia, despite their large presence in the market. Additionally, Qatari volumes have been notably small, but rather than float cargoes, production has simply turned down due in large part to maintenance on two trains.
S&P Global Platts Analytics expects significant discharges in the next week, however, given the prevailing contango that existed for November-December JKM, we would also expect a rapid rebuild in volumes again, albeit not necessarily as large this time around. Either way, the next surge is still expected to support shipping rates as discussed in the most recent LNG Shipping Forecast.