26 November 2018, Sweetcrude, Lagos — A big drop in Brent oil prices was causing jitters in the liquefied natural gas, LNG, market, according to trade sources quoted by Reuters.
Oil prices slumped to 2018 lows on Friday, last week, pulled down by concerns of an emerging global supply overhang amid a bleak economic outlook.
“Typically, changes in Brent tend to have a bigger impact on Asian LNG prices due to lack of liquidity in Asian gas derivatives,” said a second Singapore-based LNG trader.
Trading remained thin in the region with several LNG tankers still floating the super-chilled fuel around Asia.
But the situation may soon stabilise as end-users have stopped reselling cargoes, the trader said.
“The Chinese are not reselling cargoes like they were doing recently, so I think situation could be bottoming out,” the trader added.
Asian spot prices for LNG tumbled nearly 10 percent last week to a more than three-month low, knocked lower by a slide in oil prices, forecasts for a warmer than average winter and ample supply onshore and in tankers.
Spot prices for January delivery in North Asia LNG-AS were estimated at $10 per million British thermal units (mmBtu), 90 cents lower than last week, traders said.
“The big question mark right now is how the weather will pan out as the market will quickly turn once it starts to get cold. But until then, it’s tank-top right now in many places,” said a Singapore-based LNG trader, referring to high storage levels of natural gas in North Asia.
Temperatures in major cities Tokyo, Beijing and Shanghai in the world’s top two LNG buyers, Japan and China, are expected to be warmer than usual this week, weather data from Refinitiv Eikon showed.
