Global LNG-Asia LNG prices slip as mild weather curbs demand

Singapore — Asian spot liquefied natural gas (LNG) prices slipped this week as mild temperatures and ample inventories in Asia and Europe muted buying activity.

The average LNG price for December delivery into north-east Asia LNG-AS was $26 per million British thermal units (mmBtu) this week, down $2, or 7.1%, from the previous week, industry sources estimated.

“Warm weather in Asia and Europe continues to weigh on prices as seasonal heating demand has yet to pick up,” said Edmund Siau, LNG analyst at consultancy FGE.

“Inventories are currently high in both Asia and Europe, and LNG cargoes are being floated off Europe in anticipation of higher demand and prices.”

But an easing of stringent COVID rules in China, which have impacted economic activity this year, could boost demand.

The world’s second largest LNG importer announced on Friday it would shorten quarantines for inbound travellers and close contacts of infected people, and removed a penalty on airlines for bringing in people with suspected cases.

Two industry sources said Glencore has won a tender offered by Kuwait Foreign Petroleum Exploration Co (KUFPEC) at around $21 mmBtu on a free-on-board (FOB) basis. Reuters could not independently verify the deal.

KUFPEC had last week issued a tender offering a cargo for December loading from Australia’s Wheatstone plant.

In Europe, S&P Global Commodity Insights assessed LNG prices on a delivered ex-ship (DES) basis into north-west Europe at $21.646/mmBtu on Nov. 10, a discount of $11/mmBtu to December Dutch gas prices, said global director of LNG Ciaran Roe, as high storage levels and mild weather dampen prices in Europe.

Dozens of LNG vessels that have been circling off Spain and the Mediterranean since October due to limited slots to unload their cargoes are likely to stay there in anticipation of rising European gas prices.

While near-term prices are expected to be soft, the market could turn around if winter weather in the first quarter next year gets colder, added Froley.

“There are still big questions over how easily the market can fill up storage for the winter after…. Traders are also laser-focused on any news about the U.S. Freeport LNG project, which has been out since June. There’s still no feedgas going into the plant.”

Meanwhile, spot LNG freight rates in the Atlantic rose by $7,750 to $484,750 a day, according to Henry Bennett, head of pricing at Spark Commodities. The Pacific spot freight rates also rose from the previous week by $8,250 to $439,000 per day.