SINGAPORE: Asian spot liquefied natural gas (LNG) prices gained this week, the first rise after three weekly declines, as the imminent expiry of a transit deal for Russian gas through Ukraine to Europe lent support to prices.
The average LNG price for February delivery into north-east Asia was $14.10 per million British thermal units (mmBtu), up 6% from $13.30/mmBtu last week, industry sources estimated.
Asian LNG prices have gained 20% this year and averaged $11.97/mmBtu in 2024.
“The biggest thing people are keeping an eye on is TTF’s upward movement,” said Masanori Odaka, senior analyst at Rystad Energy, referring to the Dutch Title Transfer Facility (TTF) hub.
He added that some industry participants were taking the expiry of a Russia-Ukraine gas transit contract at the end of this year as bullish news.
Russian gas supply into Europe could affect prices on the TTF, which also has an impact on Asia LNG prices.
Global LNG: Asian spot LNG falls on muted demand, strong inventories
Russian President Vladimir Putin said on Thursday there was no time left this year to sign a new Ukrainian gas transit deal, and blamed Ukraine for refusing to extend the agreement that also brings gas to Slovakia, the Czech Republic and Austria.
“The other thing is a cold front potential in the U.S. which could end in a deep freeze like it did in 2021,” Rystad’s Odaka added.
“Asia seems relatively well stocked, so below average to normal winter will not likely cause China, Korea or Japan to buy significant volumes in the spot market.”
In Europe, delivered prices turned higher this week, mostly on continued uncertainty about the agreement to continue gas transit to Europe through Ukraine after the current deal expires, said Martin Senior, head of LNG pricing at commodity pricing agency Argus.
“Weak wind generation forecasts in northwest Europe during the Christmas break and into the weekend also supported gas-fired generation demand,” he added.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $13.76/mmBtu on Dec. 24, a $0.20/mmBtu discount to the February gas price at the Dutch TTF hub.
Argus assessed the price at $13.745/mmBtu, while Spark Commodities assessed the price for January delivery at $13.753/mmBtu.
The U.S. arbitrage to Northeast Asia via the Cape of Good Hope for January is still currently closed due to the recent TTF rally, providing more incentive for U.S. cargos to deliver to Northwest Europe instead, said Spark Commodities analyst Qasim Afghan.
In LNG freight, Atlantic rates held steady at $23,500/day, while Pacific rates fell to $21,500/day, added Afghan.
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