CORRECTED GLOBAL LNG Asia spot prices fall for the fourth consecutive week
(Fixes typo in paragraph 5. Arbitrage, not arbitration.
By Marwa Rashad
LONDON, January 13 (Reuters) – Asian spot liquefied gas (LNG), prices fell for the fourth consecutive week due to mild weather and large inventories. Further downward pressure is expected because of the upcoming Lunar New Year holiday.
According to industry sources, the average LNG price for February delivery into Northeast Asia was $23 per Million British Thermal Units (mmBtu) which is down 22% or 8% from the previous week.
The average March delivery price is $20.60/mmBtu.
“Prices continue falling with very little demand. Spot activity has occurred at current levels, but the upcoming Asian holidays will cause downward pressure,” stated Toby Copson (global head of trading advisory at Trident LNG).
He said, “(At) Sub-$20, I can see some flexibility given freight is low relative to recent highs. This makes for favourable conditions fob buyers looking to arbitrage in Asia as it’s still holding a premium.”
The start of the year in Europe saw a drop in gas and LNG prices. This was partly due to unseasonably mild conditions across Europe. It also caused less stress on gas inventories and sent the benchmark gas price at TTF hub in the Netherlands down 14% from the end 2022.
Tobias Davis, head LNG Asia at brokerage Tullett Prebon, stated that “unless we see a late-winter cold snap, market expects storage levels to remain strong as we come out from winter.”
S&P Global Commodity Insights (SPGCI) assessed its daily Northwest Europe LNG Marker (NWM) price benchmark, for cargoes delivered in February on ex-ship (DES) basis, at $19.241/mmBtu on Jan. 12, a discount of $2.2/mmBtu to the February gas price at the Dutch gas TTF hub, according to Ciaran Roe, global director of LNG.
“March JKM, April JKM derivatives on January 12 are a negative $0.60-2/mmBtu Discount to the TTF Months. This has eased pressure on the European LNG differentials and means Europe isn’t being outbid for LNG at the moment,” Roe said.
Alex Froley, LNG analyst at data intelligence firm ICIS said that Europe’s gas storage is at high levels for the time of year, which few would have expected amid the supply cuts of last summer, pushing prices down across the curve for the next couple of years to the $20-25/mmBtu level.
Froley said that “there may not be much to fall in near term” as there are already signs for increased cargoes heading towards Asia. Additional drops could result in increased competition from Asian buyers as well increased consumption by industrial users of gas from Europe.
According to Henry Bennett (global head of pricing at Spark Commodities), LNG freight rates fell as the market moved out of peak winter and as Freeport delays continue releasing vessels for the spot market.
Spark’s Atlantic rate dropped by 25% to $90,000./day on Friday, while the Pacific rate decreased by 17%, to $111,750/day. (Reporting and Editing by Marwa Rashad; Editing By Nina Chestney