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Asia prices improve on higher demand; eyes on Russia

Asia liquefied natural gas (LNG) prices rose this week following three weeks of decline as demand increased in China after a sharp drop in temperature, while market players eyed Russian supply into Europe.

The average LNG price for December delivery into Northeast Asia LNG-AS rose to $31.5 per metric million British thermal units (mmBtu), up $2, or about 6.8% from the previous week, industry sources said.

Sustained below normal temperatures could deplete inventories rapidly and send buyers back to the spot market, where prices need to remain elevated to hold the arbitrage against the TTF, Emily McClain, senior gas markets analyst at Rystad Energy, said in a report.

“While the market appears to be heaving a sigh of relief, the healthier supply-side picture is balanced by the onset of colder weather in North Asia and Europe and mounting vessel congestion at the Panama Canal, and we are certainly not out of hot water yet,” she said.

Market players are eying transit capacity auctions on Monday that could indicate Russian supply to Europe for the next months. Low gas flows from Russia and concerns over a political row with Belarus stoked fears of tight supplies this winter and sent gas prices higher on Friday.

“The spread between JKM and TTF is widening again, partly because of the pressure on TTF based on hopes and early signals that Russia indeed will step up its exports towards NW-Europe and the increased gas demand in Asia now colder weather has started to arrive,” said Hans van Cleef, senior energy economist at ABN Amro.

Pacific LNG freight spot rates hit a record high on Friday, surpassing $291,000 per day, data intelligence firm Spark Commodities said.

Elsewhere, Angola’s LNG project has launched a tender to sell LNG for Nov-Dec delivery to as far as southeast Asia.

The Electricity Generating Authority of Thailand (EGAT) is seeking an LNG cargo for delivery in December, in a re-issue from a previous tender in which EGAT sought two cargoes for delivery in November and December.
Source: Reuters (Reporting by Marwa Rashad; Editing by Aditya Soni)

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