Asian spot prices rally to eight-year seasonal high

HOUSTON: Spot prices for liquefied natural gas (LNG) in Asia rose this week to their highest for this time of the year since 2013, as buyers prepare for more extreme temperatures amid a supply crunch.

The average LNG price for September delivery into Northeast Asia was estimated at about $16.90 per million British thermal units (mmBtu), up $1.30 from the previous week, industry sources said.

LNG: Asking the right questions

Demand for LNG, mainly used in thermal plants to generate electricity, rises during the northern hemisphere summer to meet air-conditioning needs.

Temperatures in Beijing, Tokyo and Shanghai are expected to be higher than average over the next two weeks, increasing short-term demand for cooling, weather data from Refinitiv Eikon showed. Additionally, buyers are already securing demand ahead of winter.

"Prices usually peak during summer and winter and fall in between, but the shoulder season effect got squeezed this time," a London-based trader said, referring to the period between the summer and winter demand periods.

Last winter, spot prices rose to record highs above $33 per mmBtu amid production constraints in export countries. Europe has failed to replenish inventories since then, competing for world spot demand with China, a top consumer with scarce storage capacity.

Beijing Gas bought one cargo to be delivered between Sept. 26-30 into the Yuedong terminal at a price well above $15 per mmBtu in a tender in which it was seeking three cargoes, industry sources said.

China's Shenzhen Energy bought a cargo for Aug. 19-27 delivery to the same terminal at $16.20 per mmBtu, they said.

PetroChina sold a cargo for delivery into the Fujian terminal in China over Sept. 4-8 at $16.14 per mmBtu during the S&P Global Platts' pricing process on Thursday.

A fire at Gazprom's Urengoy gas condensate preparation facility on the Yamal region on Thursday also supported prices, traders said.

Record exports earlier this year from the United States helped make up for production disruptions in the East but the amount of gas flowing to export plants has slipped. Volumes fell from 10.8 billion cubic feet per day (bcfd) in July to 10.4 bcfd so far in August. That compares with a record 11.5 bcfd in April.