LONDON: Asian spot liquefied natural gas (LNG) prices have reached their highest level in over seven months, driven by supply disruption concerns and gains in the European market.
The average price for September LNG deliveries into northeast Asia is estimated at $12.90 per million British thermal units (mmBtu), up slightly from $12.80/mmBtu last week, marking the highest point since mid-December, according to industry sources.
Samuel Good, head of LNG pricing at Argus, noted that while the price rise in Asia is mainly influenced by European gains, LNG demand in northeast Asia remains moderate despite hot weather, particularly in South Korea, which is also dealing with unexpected nuclear outages.
With above-average temperatures forecasted in South Korea, Japan, and parts of China, cooling demand is expected to stay robust. However, as temperatures normalize in southeast China, the potential for a late-summer surge in power demand may diminish.
Klaas Dozeman, a market analyst at Brainchild Commodity Intelligence, added that gas demand in Asia remains strong enough to attract cargoes, though current price levels may deter some price-sensitive buyers from the spot market. He also mentioned that the weakening of the La Niña weather pattern could reduce gas demand in Asia and North America for the coming winter.
In Europe, gas prices have climbed due to increased geopolitical risks in the Middle East and a surprise incursion by Ukraine into Russia’s Kursk region, affecting Russian gas flows into Ukraine. The benchmark front-month contract at the Dutch TTF hub hit 40.25 euros on Friday, its highest since December 8.
Atlantic LNG freight rates rose for the first time in a month to $75,250 per day, while Pacific rates increased for the seventh consecutive week to $86,750 per day, according to Spark Commodities analyst Qasim Afghan.
