The average LNG price for March delivery into northeast Asia slipped to $13.90 per MMBtu from $14 per MMBtu last week, industry sources estimated, ahead of today’s US Presidential inauguration.
“The slight decrease was attributed to weak demand in Asia, as buying interest remained muted despite colder weather, owing to healthy inventory levels,” said Go Katayama, analyst at data and analytics firm Kpler.
“Going forward in Asia for the week ahead, we can expect some bearishness in prices driven by balanced inventories and average to warmer-than-usual temperatures across key markets.
“The contract rollover to March deliveries is expected to further pressure prices, as forecasts indicate a 50-60% chance of above-average temperatures in March,” he said.
Japan, the world’s second-largest importer, recorded LNG stockpiles held by major electric utilities of 2.11 mill tonnes as of 12th January, down from 2.15 mill tonnes the previous January but above the five-year average of 1.96 mill tonnes, according to data from Japan’s industry ministry.
Northeast Asian demand was also muted, as current prices are too high for spot demand to emerge from price-sensitive buyers in India and China, said Martin Senior, head of LNG pricing at Argus.
“There have been at least six diversions in the mid-Atlantic from Asia to Europe over the past week, with weak Asian demand providing limited competition for Atlantic basin cargoes,” he said.
In Europe, prices rose on the TurkStream gas pipeline tansit concerns , unplanned maintenance at Azerbaijan’s Shah Deniz field, US sanctions on two Russian export terminals and forecast of colder temperatures in northwest Europe.
“Winter demand has picked up and, as a result, both import flows and stocks are needed to meet demand. Moreover, northwest Europe has experienced… periods with no wind and no sun,” said Hans Van Cleef, chief energy economist at PZ-Energy.“Demand for gas for power generation has increased.”
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 $13.73 per MMBtu on 16th January, a $0.25 per MMBtu discount to the March gas price at the Dutch TTF hub.
The U.S. arbitrage to northeast Asia via the Cape of Good Hope for February widened, strongly signalling that US cargoes were incentivised to deliver to Europe over Asia, said Spark Commodities analyst, Qasim Afghan.
In the LNGC charter market, Atlantic rates dropped for a second week running to $20,000 per day on Friday, while Pacific rates fell to $18,750 per day, Afghan added.
