SINGAPORE: Asian spot liquefied natural gas (LNG) prices inched up after two previous weeks of declines as geopolitical risk factors including U.S. threats of sanctions on energy producer Russia, and supply concerns lent support.
The average LNG price for September delivery into Northeast Asia was at $12.10 per million British thermal units (mmBtu), up from $11.90/mmBtu last week, industry sources estimated.
Geopolitics was back on stage with the threat of sanctions on offtakers of Russian oil and gas, potentially tightening the market if LNG is purchased elsewhere, said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence, but added it remains unclear how things will turn out.
U.S. President Donald Trump has threatened sanctions on both Russia and buyers of its exports unless Moscow makes progress toward ending the war in Ukraine by August 8.
Dozeman added that a trade agreement the U.S. struck with the European Union remained supportive, as the EU pledged to buy$250 billion of U.S. energy supplies per year.
Additionally boosting prices, this week’s earthquake in eastern Russia triggering tsunami alerts and a slower than expected ramp-up at LNG Canada added to supply concerns, said analysts.
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“Still, any upside is capped by weak cooling demand across South and Southeast Asia, and elevated LNG inventory and underground gas storage in China,” said Kpler analyst Go Katayama.
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for cargoes delivered in September on an ex-ship basis at $11.347/mmBtu on July 31, a $0.45/mmBtu discount to the September futures price at the Dutch TTF hub.
Argus assessed the price at $11.39/mmBtu, while Spark Commodities assessed it at $11.374/mmBtu.
“Continued strong pipeline (gas) flows and high German wind generation will suppress bullish impulses. However, LNG supply tightness from Italy’s Rovigo maintenance and intensified Egyptian procurement activity may introduce upward risk,” said Kpler’s Katayama.
One LNG cargo was diverted from the Netherlands to Egypt, said Argus head of LNG pricing Martin Senior, adding that high temperatures in Egypt could support demand for additional cargoes.
The U.S. arbitrage to Northeast Asia via the Cape of Good Hope widened this week to continue incentivising U.S. cargo deliveries to Europe, said Spark Commodities analyst Qasim Afghan. The arbitrage via Panama, which had pointed to Asia for almost two weeks, is now closed and pointing to Europe.
In LNG freight, Atlantic rates rose to $35,500/day on Friday, while Pacific rates declined for a fifth straight week to $33,500/day, he added.
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