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Asian LNG spot prices rise on oil surge and heating demand

Asian spot prices for liquefied natural gas (LNG) rose this week, driven by a surge in oil prices and a potentially colder start to winter and higher heating demand.

The average LNG price for January delivery into northeast Asia was estimated at around $7.40 per million British thermal units (mmBtu), up $1.00 from the previous week, industry sources said.

Brent oil futures, which the majority of Asian LNG contracts are priced against, rose 6% this week to the highest since March as traders were optimistic about oil demand recovering due to developments with various coronavirus vaccines.

Temperatures in Beijing, Shanghai and Seoul are expected to be lower than average over the next two weeks, weather data from Refinitiv Eikon showed, increasing gas demand for heating.

Analysts at consultancy Energy Aspects said heating demand started earlier than usual in northeast Asia this year.

“The onset of early cold weather may have helped an early stockdraw and encouraged Chinese buyers to go back to the market for spot LNG purchases,” they said.

“Adding to recent Chinese demand, two new 200 per thousand cubic metres (kcm) storage tanks at Shenergy and CNOOC’s Yangshan LNG terminal began operations last week, almost doubling the facility’s storage capacity to 895 kcm,” they added.

The amount of gas flowing in the United States to LNG export plants was on track to hit a record high this week, with a good part of them expected to land in Asia. Cheniere Energy’s Corpus Christi plant in Texas has pulled in enough fuel to supply all three of its liquefaction trains.

Loadings from the Bintulu plant in Malaysia continue to normalise after a brief disruption recently, traders said.

Malaysian state-owned energy giant Petronas, the world’s fourth-biggest LNG exporter, said its Pengerang Integrated Complex (PIC) will be operational by early next year.
Source: Reuters (Reporting by Sabrina Valle in Rio De Janeiro and Jessica Jaganathan in Singapore; editing by Nina Chestney)

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