LONDON: Asian spot liquefied natural gas (LNG) recorded its second weekly gain since the end of August, amid concerns over supply disruptions due to geopolitical tensions and lower feedgas volumes at US terminals undergoing planned maintenances.
The average LNG price for December delivery into north-east Asia rose to $13.80 per million British thermal units (mmBtu), up form $13.50/mmBtu last week, industry sources estimated.
“Prices are holding firm, with the market continuing to balance at high levels amid ongoing demand and geopolitical tensions,” said Alex Froley, senior LNG analyst at data intelligence firm ICIS.
US production has dipped over the week, with reductions at the Cameron and Sabine Pass terminals due to planned maintenance, he added.
Asian prices also tracked European gas prices at the Dutch TTF hub, which hit a 10-month high on concerns over supply disruption due to geopolitical tensions in the Middle East and in Ukraine.
“For now, JKM (the Asian benchmark), just keeps up pace with geopolitical developments in other regions as TTF seems to have a slight premium over JKM when corrected for shipping and insurance,” said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence.
“The geopolitical increase of oil makes oil-indexed LNG a bit more expensive, thereby slightly intensifying the spot demand for LNG,” he said, adding that investors are increasingly likely accounting for a longer war in the Middle East.
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In Europe, delivered LNG prices rose over the week, lifted by gains at downstream gas hubs which came from several drivers including an unplanned outage at Norway’s Sleipner field and adjustments to heating demand expectations for later this month and through November, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in December on an ex-ship (DES) basis at $13.196/mmBtu on Oct. 24, a $0.25/mmBtu discount to the December gas price at the Dutch TTF hub.
Argus assessed the price for December delivery at $13.240/mmBtu, while Spark Commodities assessed the price for November delivery at $13.104/mmBtu.
In LNG freight, the Atlantic rates dropped for a fifth consecutive week to $20,750/day on Friday, while the Pacific rates continued to decline for an eleventh straight week to $36,750/day.
“Freight rates in both basins continue to be at their lowest levels in five years for this time of year,” said Spark Commodities analyst Qasim Afghan.
Argus’ Samuel Good said that the subsequent weakening of the freight market has further increased the number of firms incentivised to offer Atlantic cargoes to Asia.