Asian spot liquefied natural gas (LNG) prices fell this week to its lowest level in 10 weeks amid mild weather and strong storage inventories.
The average LNG price for February delivery into north-east Asia (LNG-AS) was at $13.30 per million British thermal units (mmBtu), its lowest level since mid October and down from slightly lower than $14.50/mmBtu last week, industry sources estimated.
“The market is reasonably comfortable in immediate supply/demand terms. China seems well-stocked and Japan is bringing some new nuclear plants back in coming weeks,” said Alex Froley, senior LNG analyst at data intelligence firm ICIS.
“Given normal weather and an absence of supply shocks, the conditions could be in place for prices to begin a slow slide over the first quarter of 2025, similar to last year,” Froley added.
Samuel Good, head of LNG pricing at Argus, said the easing of Asian prices was due to weak downstream consumption in the face of mild weather and was met by a spate of cargo offers.
Both Beijing and Seoul are expected to have mostly above-average daily minimum temperatures for the end of this month and through January. However, Tokyo was set for continued colder weather throughout the period which could support Japanese terminal throughput in the coming weeks, Good said.
In Europe, gas prices rose this week as uncertainty remains over Russian gas flows to Europe with the end of the Ukraine gas transit deal looming.
“Russia’s pipeline flows through Ukraine will remain a key focus of attention for traders across the holiday period,” ICIS’ Froley said.
Florence Schmit, a European energy strategist at Rabobank, said that Russian flows through Ukraine is unlikely to resume in the first quarter of 2025, leaving Europe more exposed to higher LNG import demand in the new year.
“As the amount of gas that will have to be replaced is small, actual concern about supply availability is limited. Demand in Asia and the pace of Europe’s gas storage withdrawals will be key in determining which market will become the premium market in Q1,” she added.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $12.967/mmBtu on Dec. 19, a $0.20/mmBtu discount to the February gas price at the Dutch TTF hub.
Argus assessed the price at $12.990/mmBtu, while Spark Commodities assessed the price for January delivery at $12.913/mmBtu.
The U.S. arbitrage to north-east Asia via the Panama Canal is currently also signalling U.S. cargos are incentivised to deliver to Northwest Europe, said Spark Commodities analyst Qasim Afghan.
In LNG freight, Atlantic rates rose for the fourth week running to $23,500/day on Friday, while Pacific rates rose to $22,000/day, Afghan added.
Source: Reuters
