Asia Spot LNG Prices Stay at 7-Month High Due to Russian Supply Concerns, Reports Reuters

By Marwa Rashad

LONDON (Reuters) – Asian spot liquefied natural gas (LNG) prices hit their highest level in over seven months, influenced by gains in Europe and rising concerns over potential supply disruptions.

Industry sources estimated the average LNG price for September delivery into northeast Asia at $12.90 per million British thermal units (mmBtu), marking an increase from $12.80/mmBtu the previous week and the highest level since mid-December.

According to Samuel Good, head of LNG pricing at a commodity pricing agency, the increase in Asian prices is primarily driven by European market trends. He noted that demand for LNG in northeast Asia remains relatively weak despite hot weather in the region, particularly in South Korea, which is also dealing with unexpected nuclear outages.

Forecasts indicate above-average temperatures for South Korea, Japan, and China’s major cities like Beijing and Shanghai in the coming week, which could lead to increased cooling demand. However, southeastern China, where considerable gas-fired generation capacity is located, is expected to return to normal temperatures shortly, potentially curtailing a late summer surge in power demand.

Klaas Dozeman, a market analyst, confirmed that gas demand in Asia is robust enough to attract LNG cargoes. However, he cautioned that the current price levels might deter price-sensitive buyers from the spot market. Furthermore, Dozeman mentioned a weakening forecast for the La Nina weather pattern, which could reduce gas demand next winter in both Asia and North America relative to earlier estimates.

In Europe, gas prices have risen this week due to heightened geopolitical risks in the Middle East and Ukraine’s unexpected maneuvers in Russia’s Kursk region, impacting natural gas flows into Ukraine.

The benchmark front-month contract traded at the Dutch TTF hub reached 40.25 euros, the highest since December 8. Good added that while deliveries remain stable, concerns persist about the potential impact on gas flow through the Sudzha point, which sees nearly 40 million cubic meters of gas passing through daily. This situation may prompt traders to adjust their positions to avoid shortages in the event of a price spike.

Additionally, S&P Global Commodity Insights reported its daily North West Europe LNG Marker (NWM) price for September cargoes delivered on an ex-ship basis at $12.676/mmBtu, reflecting a $0.15/mmBtu discount to the September gas price at the Dutch TTF hub.

Spark Commodities assessed the price slightly higher at $12.717/mmBtu, while Argus placed it at $12.700/mmBtu. Furthermore, Atlantic LNG freight rates increased for the first time in a month to $75,250/day, and Pacific rates have risen for seven consecutive weeks to $86,750/day, according to Spark Commodities analyst Qasim Afghan.