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GLOBAL-LNG-Asian prices fall for third straight week on warmer weather

Asian spot liquefied natural gas (LNG) prices fell for a third week as a warmer season approaches in the northern hemisphere, reducing the heating demand that sent prices to a historic high last month.

The average LNG price for March delivery into Northeast Asia LNG-AS was estimated at around $7.20 per million British thermal units (mmBtu), traders said. That’s 80 cents lower than the previous week.

Cargos for April delivery were estimated at $6.60 per mmBtu, with Spring in the northern hemisphere approaching after a cold spell and supply disruptions.

That’s about five times lower than the record high of $32.50/mmBtu on Jan. 13.

Temperatures in Tokyo and Shanghai, in two of the world’s top LNG consuming countries, are expected to rise slightly above the historical average over the next two weeks, weather data from Refinitiv Eikon showed.

“The weather coming back down to Earth in a lot of half of January has essentially meant that this demand has waned,” said Ben Chu, research director of Gas & LNG for consultancy firm WoodMackenzie.

Falling prices in Asia are normalizing the flow of U.S. ships to Europe. Four U.S. vessels have changed their trajectory in the middle of the Atlantic in the last two weeks – diverting from their intended delivery in Asia towards Europe instead, according to Kpler consultancy firm.

Congestion delaying LNG shipments via the Panama Canal which has been driving up freight costs in the past months, has also eased.

LNG tanker transits of the Panama Canal hit a record in January, with 58 U.S. vessels finding a shorter route to Asia, the canal operator said in a Feb. 3 note.

Modifications in the canal’s reservation system on Jan. 4 allowed last minute slots be offered through auctions. From the 25 auctions last month, nine have been awarded to LNG vessels, the canal’s operator said.

Karpowership, one of the world’s largest operators of floating power plants, said some unique challenges have now eased.

“With prices falling, I expect there to be a flurry of purchases for delivery in March.”

Pakistan State Oil (PSO) is seeking an LNG cargo for delivery in April, in its first potential purchase in three years.

Thailand’s state-owned company PTT shipped an LNG reload cargo to Japan for the first time.
Source: Reuters

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