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July JKM surges on robust Chinese demand, oil prices

The Platts JKM for July rose $0.75/MMBtu week-on-week to $9.55/MMBtu DES North Asia Friday on the back of robust Chinese buying interest driven by domestic supply concerns, and amid sustained strength in European gas hub and oil prices.

Bullish sentiment pervaded the market as Chinese buying interest was reported for both Q3 and Q4 deliveries. Sources said that state-owned companies needed to act early under a previous government mandate to secure supply for the winter.

Prompt demand from the country also stemmed from ongoing pipeline maintenance issues largely in east China, sources said.

Malaysia’s Petronas on Tuesday awarded a single-cargo sell tender for a June 23 loading PFLNG cargo, for delivery to China, according to sources. Bids were submitted on online trading platform GLX Monday, but sources said bilateral negotiations resulted in a higher price awarded.

Market participants also indicated that a handful of short-covering requirements, amid current oil price environment, might have also resulted in some higher-priced deals.

Strong deal prices were heard concluded throughout the week, with an Asia-based trading firm selling a late-July cargo for delivery into northeast Asia this week at $9.40/MMBtu.

In addition, a portfolio player mid-week sold an August-delivery cargo into northeast Asia at close to $9.70/MMBtu to a trader, according to sources.

A Western Japanese utility was heard to have offered a late-July delivery cargo for a time-swap deal, and seeking a February cargo in return, according to two market participants familiar with the process.

The cargo was heard to have been sourced from Australia. The end-user was also heard to be keen on an outright sale on a fixed-price basis, with bids expected by May 25.

Donggi Senoro’s July 6-7 delivery DES sell tender, which drew stronger than expected bids, was heard awarded at close to $9.10/MMBtu to a trading house. However, another market source said that the cargo had been awarded to Thailand’s PTT, though this could not be confirmed.

Likewise, South Korea’s Komipo tender seeking a cargo delivery July 21-25 was also heard awarded at $9.20/MMBtu to $9.30/MMBtu.

In India, Gail awarded its single cargo buy tender seeking a June 10 delivery, possibly around $8.90/MMBtu, two traders said.

Compatriot IOC issued a single cargo buy tender for a June 27 delivery DES Dahej. The tender closes May 30, with validity until May 31.

Summer demand from the power sector was resulting in more incremental spot buying. BPCL was heard to have issued a buy tender seeking a July 25 delivery to port Dahej. The tender closes on May 29, with bids remaining valid till May 31.

Gail was also heard in the market with a single-cargo buy tender seeking a July delivery. The tender closes May 30, with validity till May 30.
Source: Platts

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