Asian spot LNG prices drop by 23 percent on the week with Europe offering $4.50 per MMBtu premium
LNG cargo liftings declined as North Asian spot futures prices dropped by 23 percent on the week, though remained over $20 per million British thermal units and with European benchmarks offering a $4.50 per MMBtu premium.
Oil and LNG rise
March 8 (LNGJ) - North Sea Brent front-month crude oil prices surged to over $70 per barrel, up from $67.30 per barrel at the end of last week. It is the highest oil price since early January 2020 and follows reported drone attacks on oil facilities in Saudi Arabia, blamed on Iran-backed Yemeni militia. The oil surge took the effective oil-linked, long-term LNG contract price to over $10 per million British thermal units.
European natural gas prices also increased with the UK National Balancing Point and the continental European Dutch Tittle Transfer facility (TTF) both hitting the equivalent of $5.70 per MMBtu, up from $5.55 per MMBtu on March 5. The Japan-Korea Marker price for April spot LNG cargoes was around $6.00 per MMBtu, according to trading platforms.
Trading on European continental natural gas and Asian LNG contracts rise to record
Intercontinental Exchange, the operator of global platforms and clearing houses for energy and commodities, reported record trading in the continental European natural gas Dutch Title Transfer Facility (TTF) contract and in the Japan-Korea Marker contract used for North Asian LNG cargo pricing.
ICE said in a statement that Dutch TTF futures hit an open interest (OI) record of 1.04 million lots in January 2019.
“TTF futures and options combined achieved monthly volume of 952.4 terawatt hours (TWh) in January,” said ICE.
The Dutch TTF is a virtual trading point for natural gas in the Netherlands, set up by natural gas network company Gasunie in 2003.
Since then the Dutch TTF has become a leading continental European benchmark and trading hub for spot, forward and futures gas trades. It has grown in importance as the UK prepares to leave the European Union.
“Average daily volume (ADV) and OI in TTF futures and options combined are up 103 percent and 64 percent respectively in January 2019, versus January 2018,” said the trading platform operator.
ICE said the JKM LNG futures, part of price discovery by Platts, a subsidiary of US company S&P Global Inc., formerly McGraw Hill Financial, traded a record 25,605 lots in January, an increase of 22 percent compared with the previous record of 20,916 lots set in November 2018.
The JKM LNG hit an OI record on February 4, 2019, of 26,928 lots. Average daily volume and OI in JKM LNG are up 176 percent and 123 percent, respectively, in January 2019, versus January 2018.
ICE added that as previously announced it will launch its JKM LNG Average Price Options on March 4, 2019, subject to the satisfactory conclusion of applicable regulatory processes.
“Europe’s vast energy infrastructure and geographical location allow it to provide a unique role as a balancing market for LNG,” explained ICE.
“The TTF and the UK National Balancing Point are the two most liquid European natural gas benchmarks and, with its continued record trading activity, TTF is transforming into a global natural gas benchmark,” said Gordon Bennett, Managing Director, Utility Markets at Intercontinental Exchange.
“JKM LNG is one of the fastest growing natural gas benchmarks and has established itself as the most liquid Asian natural gas benchmark,” added Bennett.
