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Asian LNG spot prices jump to double digits on winter supply crunch

Asian liquefied natural gas (LNG) prices have jumped to double digits, reaching a two-year high on Friday, as a supply crunch affecting the super-chilled fuel coincided with a winter peak in demand for gas used in heating.

On Friday, traders placed bids of above $11 per million British thermal units (mmBtu) during S&P Global Platts’ trading period known as market on close (MOC) assessment process, data from the price agency showed.

Commodity traders Trafigura and Vitol placed bids ranging from $11.05 to $11.24 per mmBtu for cargoes to be delivered into the Northeast Asia region in the second half of January, the data showed.

At these bid levels, Asia spot LNG prices LNG-AS will reach their highest level since late 2018, Reuters data showed.

The rise in prices is due to supply outages in some places, high freight rates and winter demand from North Asian buyers, according to trade sources.

A recent tender by Pakistan LNG to buy 6 spot cargoes for January only garnered interest for half of the requirements, showing how tight the supply situation is, sources said.

Spot LNG prices in Asia dropped to record lows below $2 per mmBtu in May when coronavirus-induced lockdowns hit demand for gas from industries, but prices rebounded in the fourth quarter and have risen sharply since November due to supply issues.

The prices are expected to stabilise in second half of January, once some of the supply is expected to return and as arbitrage volumes from the United States arrive in the region, traders said.

U.S. is expected to ship record volumes of LNG to Asia in December, data from Refinitiv Eikon showed.
Source: Reuters (Reporting by Jessica Jaganathan. Editing by Jane Merriman)

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