LONDON: Asian spot liquefied natural gas prices rose slightly this week, but remained around the $11 area on well-stocked inventories and weak demand.
The average LNG price for January delivery into north-east Asia was $11.66 per million British thermal units, up from $11.10/mmBtu last week, industry sources estimated.
“The APAC market remains largely flat to bearish, which is reflective of (a) later start to winter with unseasonably warmer temps, which is muting cyclical heating demand,” said Toby Copson, chairman at Davenport Energy Partners.
“Geopolitical risk premiums are mostly priced in, so failing any new supply bottlenecks, it is going to trade in this current range until we see a drastic and prolonged drop in temperatures,” he added.
Asian spot gas prices built up their premium to European gas prices for near months at the TTF hub, mainly to account for an increase in spot charter rates that meant drawing cargoes over longer distances to Asia rather than Europe would cost more, said Alex Froley, senior LNG analyst at data intelligence firm ICIS.
In Europe, Dutch and British wholesale gas prices edged lower on Friday morning as expectations of stronger wind power output and warmer temperatures curbed gas demand. Prices rose earlier this week as a cold spell drove heating demand higher.
“Spot gas prices at the TTF hub have held fairly rangebound, with the first big cold snap of the winter not driving them significantly higher,” Froley said.
Europe storage inventories are lower than the previous two years, but healthy U.S. supply is keeping withdrawals at a slower rate versus last year, said Aly Blakeway, manager of Atlantic LNG at S&P Global Energy.
LNG demand continues to grow into the East Mediterranean region, including Turkey and Greece, on strong gas demand for power generation. This, along with Egypt’s prompt procurement of a few cargoes, pushed sellers to withhold their offers as they race to sell into these premium markets, Blakeway said.
S&P Global Energy assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in January on an ex-ship (DES) basis at $9.994/mmBtu on November 20, a $0.49/mmBtu discount to the price at the TTF hub.
Argus assessed the price at $10.020/mmBtu, while Spark Commodities assessed the December price at $10.060/mmBtu.
The number of hedge funds trading TTF futures soared to a new record high of 450 last week, demonstrating the appeal of the EU gas market as a commodity investment, said independent gas analyst Seb Kennedy.
Funds bought more TTF short positions in the week ending November 14, leaving their net position close to zero, he added.
The U.S. front-month arbitrage to north-east Asia via the Cape of Good Hope is pointing to Europe, while the arbitrage via the Panama Canal is strongly open to Asia, said Spark Commodities analyst Qasim Afghan.
Global LNG freight rates in the Atlantic rose to the highest level since December 2023 at $130,750/day. Pacific rates recorded the highest level since August 2024, at $78,750/day, he added.
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