London — Asian spot liquefied natural gas (LNG) prices were stable for a second week running, but sentiment remained bullish on a colder weather outlook and uncertainty over European gas supply amid geopolitical tensions.
The average LNG price for April delivery into north-east Asia was at $24.40 per metric million British thermal units (mmBtu), down $0.30, or 1.2% from the previous week, industry sources said.
“Due to ongoing global gas shortages, LNG prices started the year as they finished (2021), very much above seasonal norms. Historically, LNG prices should track lower from recent highs as the northern hemisphere exits winter,” said Jamie Maddock, equity research analyst at Quilter Cheviot.
“However, still-to-be-resolved tensions between Russia, Ukraine and the West will keep prices well-bid even if conflict is avoided, preventing fundamentals to be reasserted,” he added.
European LNG imports remain robust at 6.9 billion cubic metres (bcm) so far in February, after a record high in January at over 10 bcm, but brimming LNG terminals in the continent lack room for more gas in case of supply disruptions.
“The big question which remains hanging over the market is whether Europe – and mainly Germany and the Netherlands – are able to rebuild gas inventories before the start of the next winter,” said Hans van Cleef, senior energy economist at ABN Amro.
With uncertainty over Russia gas exports to Europe due to risks of Russian invasion of Ukraine, and with gas prices trading 3-4 times higher than the long-term average, Europe will still be very keen on buying LNG during the summer and into next winter.
“As long as Russia is not willing to increase exports to Europe, the tight market conditions will remain and will keep prices elevated for longer. The current forward curve shows the market does not expect prices to ease too much before spring 2023,” Van Cleef added.
In Asia, tepid demand from China during the Lunar New Year and the Winter Olympics is expected to reverse due to a pick-up in industrial demand and an expected cold spell.
Rystad Energy said that the cold spell in Japan and Korea has depleted LNG inventories and could generate re-stocking demand for April. Refinitiv Eikon data shows temperatures there will remain 3-6 degrees Celsius below normal over the next 15 days.
An outage at two mega trains at Qatar’s Ras Laffan project with a capacity of 7.8 million tonnes per annum each is another bullish factor for the market.
Atlantic basin charter rates turned negative to -$500/day on Friday, not covering the fuel cost of ballasting the vessel back to the load-port, according to Spark Commodities. Rates for the Pacific were estimated at $17,500/day.
Elsewhere, GAIL (India) Ltd has issued a swap tender offering six LNG cargoes for loading in the United States and seeking six cargoes for delivery into India in 2022. L8N2UQ4UA
Turkish Botas is seeking 10 cargoes of liquefied natural gas (LNG) for delivery between March and December.
