SINGAPORE: Asian spot liquefied natural gas (LNG) prices were flat this week, holding at a ten-week low amid Europe’s bearish gas price sentiment, though some emerging spot demand has curbed losses.
The average LNG price for April delivery into northeast Asia <LNG-AS> was at $13.50 per million British thermal units (mmBtu), industry sources estimated.
Asian LNG prices are bearish, driven by anticipated declines in the Dutch Title Transfer Facility (TTF) benchmark in Europe and stable Pacific supply, said Kpler analyst Go Katayama.
“Looking ahead, Asian LNG prices are expected to decline next week, driven by anticipated weakness in European TTF, continued soft Asian fundamentals, and stable Pacific supply,” he said.
“Warmer weather forecasts in northeast Asia will likely curb gas-for-power demand in March, following accelerated inventory drawdowns by power utilities in February.”
Spot demand from Korean and Japanese importers, including Korea Gas Corp, JERA, Tokyo Gas and Osaka Gas, has recently emerged as buyers seek to replenish stocks after a cold winter, said a Rystad Energy note.
Global LNG: Asian LNG spot prices at 10-week low amid comfortable storage
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $11.402/mmBtu on March 6, a $0.55/mmBtu discount to the April gas price at the Dutch TTF hub.
Argus assessed the price for March delivery at $11.585/mmBtu. Spark Commodities assessed it at $11.589/mmBtu.
“A key driver behind this fall is multi-strategic investment funds selling the TTF to de-risk as equities have fallen,” said Martin Senior, Argus head of LNG pricing.
He added, prices were also weighed down by Venture Global’s announcement that it expects to load 219-239 cargoes from its Plaquemines project this year, as it was higher than expected and could loosen a tight summer balance.
Additionally, a European Commission proposal to retain gas storage requirements and targets for two more years but with added flexibility reduced pressure on summer injection demand, said Rabobank energy strategist Florence Schmit.
The proposal said the target to fill EU gas storage caverns to 90% capacity by Nov. 1 would remain binding, but targets in earlier months are “indicative” - which typically means non-binding.
“Slowly materializing changes to the storage mandates alongside growing expectations that some Russian flows will return to the energy mix has turned sentiment around,” said Schmit.
In LNG freight, Atlantic rates eased to $19,500/day on Friday, while Pacific rates rose to $17,500/day, said Spark Commodities analyst Qasim Afghan.
He added the U.S. arbitrage to northeast Asia via the Cape of Good Hope narrowed for a sixth straight week, with U.S. cargoes no longer strongly incentivised to deliver to northwest Europe over Asia.
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