SINGAPORE: Asian spot liquefied natural gas (LNG) prices slightly declined this week, weighed by healthy inventory levels in the region and weak demand.
The average LNG price for March delivery into north-east Asia slipped to $13.90 per million British thermal units (mmBtu), versus $14.00/mmBtu last week, industry sources estimated.
“The slight decrease was attributed to weak demand in Asia, as buying interest remained muted despite colder weather, owing to healthy inventory levels,” said Go Katayama, an analyst at data and analytics firm Kpler.
“Going forward in Asia for the week ahead, we can expect some bearishness in prices driven by balanced inventories and average to warmer-than-usual temperatures across key markets. The contract rollover to March deliveries is expected to further pressure prices, as forecasts indicate a 50-60% chance of above-average temperatures in March.”
In the world’s second-largest importer Japan, LNG stockpiles held by major electric utilities were at 2.11 million metric tons as of Jan. 12, down from 2.15 million tons last January but above the five-year average of 1.96 million tons, data from Japan’s industry ministry showed.
Northeast Asian demand has also been muted as current prices are too high for spot demand to emerge from price-sensitive buyers in India and China, said Martin Senior, head of LNG pricing at Argus.
Global LNG: Asian spot prices gain on Europe gas outlook uncertainty
“There have been at least six diversions in the mid-Atlantic from Asia to Europe over the past week, with weak Asian demand providing limited competition for Atlantic basin cargoes,” he said.
In Europe, prices rose on transit concerns on the TurkStream gas pipeline, unplanned maintenance at Azerbaijan’s Shah Deniz field, U.S. sanctions on two Russian export terminals and forecast of colder temperatures in northwest Europe.
“Winter demand has picked up and, as a result, both import flows and stocks are needed to meet demand. Moreover, northwest Europe has experienced… periods with no wind and no sun,” said Hans Van Cleef, chief energy economist at PZ-Energy.
“Demand for gas for power generation has increased.”
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on an ex-ship (DES) basis at $13.73/mmBtu on Jan. 16, a $0.25/mmBtu discount to the March gas price at the Dutch TTF hub.
Argus assessed the price at $13.69/mmBtu, while Spark Commodities assessed the February price at $13.664/mmBtu.
The U.S. arbitrage to northeast Asia via the Cape of Good Hope for February widened, strongly signalling that U.S. cargoes are incentivised to deliver to Europe over Asia, said Spark Commodities analyst Qasim Afghan.
He added that the U.S. arbitrage to Northeast Asia via the Panama Canal is also closed.
In LNG freight, Atlantic rates dropped for a second straight week to $20,000/day on Friday, while Pacific rates fell to $18,750/day, said Afghan.