Asian prices near $6 per mmBtu on higher European gas, oil prices
Asian spot prices for liquefied natural gas (LNG) rose to a more than six-month high this week, tracking gains in the European gas market and as oil prices gained after attacks on Saudi Arabia’s crude oil facilities over the weekend.
Spot prices for November delivery to Northeast Asia LNG-AS are estimated to be about $5.80 per million British thermal units (mmBtu), down by 20 cents from last week, said several sources who participate in the market.
Spot prices are currently at their highest since March, Reuters data showed.
October prices are estimated to be around $5.60 per mmBtu, up 55 cents from last week, they added.
European gas prices advanced this week on stronger gas-for-power demand and a drop in French power output due to a strike.
Higher oil prices also underpinned LNG prices, traders said. Oil prices were on track for a more than 7% gain this week, their biggest weekly rise in months, on fresh Middle East tensions after a key Saudi Arabian supply hub was knocked out in an attack last weekend.
Long-term LNG contracts in Asia are typically priced on Brent crude oil prices though Asian and European physical gas markets have become more linked this year due to rising spot volumes.
Earlier this week, Shell and Vitol agreed to trade two LNG spot cargoes at $6.30 and $6.50 per mmBtu for November-delivery cargoes.
Firm Asian spot prices may be opening up arbitrage opportunities, a Singapore-based trader said.
At least five LNG tankers changed course from Europe to Asia and a rising number of other tankers were being used as floating storage following a spike in Asian prices, traders said.
“I think they are trying to capture the arbitrage between Europe and Asia. I guess it is more for price rather than demand-oriented,” the Singapore-based trader said.
Japan’s Tohoku Electric Power sought up to three cargoes for delivery from the second half of October to the first half of November, sources said.
A cargo for late October delivery was likely awarded at $5.70 to $5.90 per mmBtu, one of them said.
India’s Gujarat State Petroleum Corp (GSPC) is seeking a cargo for delivery over late October to early November, sources added.
Indian Oil Corp had sought a cargo for delivery in the second half of October, though results of that tender were not immediately clear.
Still, traders say supply was ample.
Egyptian Natural Gas Holding Co (EGAS) offered six cargoes for loading from the Idku plant over October to November, while Angola LNG and Australia’s Ichthys plant offered a cargo each for loading in October.
Shell may be offering a Prelude cargo for loading in October, one source said, though this could not immediately be confirmed.
Source: Reuters (Reporting by Jessica Jaganathan, additional reporting by Ekaterina Kravtsova in LONDON; Editing by Subhranshu Sahu)