SINGAPORE: Asian spot liquefied natural gas (LNG) prices slipped to a near three-year low this week, as inventories in Europe remain at healthy levels and buying activity in northeast Asia was subdued due to the Lunar New Year holidays.
Industry sources estimated that the average LNG price for April delivery into north-east Asia eased $0.70, or 7.4%, this week to $8.80/mmBtu, its lowest levels since end-April 2021.
Asia spot prices have halved since mid-October, pressured by high stockpiles and tepid demand in Europe and northeast Asia.
“There’s not much change in the Asian market right now – LNG activity and imports in northeast Asia remained relatively low this week due to the Lunar New Year holidays,” said Ryhana Rasidi, an analyst at data and analytics firm Kpler.
She added that a mixed weather outlook is forecast in the coming days, with a cold wave expected in China but milder weather seen for Japan and South Korea.
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Colder weather could increase power demand for heating purposes, leading to more usage of the super-chilled fuel.
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on an ex-ship (DES) basis at $7.372/mmBtu on Feb. 15, a $0.505/mmBtu discount to the March gas price at the Dutch TTF hub.
Argus assessed the price at $7.40/mmBtu, while Spark Commodities assessed it at $7.339/mmBtu.
“Prices in both basins have slipped this week, largely following European gas prices lower again as continued scope for mild late winter weather — particularly the weak potential for extreme weather events — has suggested limited late season heating demand,” said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
“Aggregate EU underground gas inventories are back higher than a year earlier, as the recent mild weather has curbed withdrawals, with the region set to end this winter with at least near-record stocks, providing that weather remains mild.”
Meanwhile, spot LNG freight rates have stayed almost level this week, after rising for the first time since mid-November last week partly due to increased voyage time from the diversion of cargoes unable to transit the Suez Canal.
Atlantic rates this week were estimated at $54,500/day on Friday, while Pacific rates were at $58,000/day, said Spark Commodities analyst Qasim Afghan.
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