Asia spot LNG at 3-month peak on steady demand, supply disruption

SINGAPORE: Asian spot liquefied natural gas (LNG) prices edged up this week, reaching the highest levels in three months, as they remained supported by steady demand and supply disruption concerns.

The average LNG price for May delivery into northeast Asia rose to $9.80 per million British thermal units (mmBtu), its highest since Jan. 12, industry sources estimated.

The average price for June delivery was estimated at $10/mmBtu.

Prices had edged higher amid heating demand in Europe, while production disruption at the Freeport LNG terminal in the U.S. also supported prices, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

While daily maximum temperature forecasts for northeast Asia are likely still too low to incentivise substantial power cooling demand in April and most of May, much of southeast Asia is set to continue experiencing hot weather, he added.

“(This is) especially in Thailand where daily maximum temperatures are set to be around 35 degrees Celsius for the next few weeks.”

The increase in Asian LNG prices is prompting suppliers with U.S.-origin LNG to consider a shift from Europe, added Masanori Odaka, a senior analyst at consultancy Rystad Energy.

“Arbitrage for US-origin LNG to Asia has been open since the first week of April 2024, meaning that suppliers of US-origin LNG will likely try to market their volume into Asia rather than Europe,” he said.

In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in May on an ex-ship (DES) basis at $9.044/mmBtu on April 11, a $0.19/mmBtu discount to the May gas price at the Dutch TTF hub, and its highest since Jan. 12.

Argus assessed the May delivery price at $9/mmBtu, while Spark Commodities assessed May delivery at $8.992/mmBtu.

This comes after Russian attacks on Ukrainian energy assets this week, as well as Freeport LNG’s outage which led to near zero gas flows on Thursday.

In late March, U.S. LNG company Freeport LNG said it expected two of the three liquefaction trains at the plant – Trains 1 and 2 – to remain shut until May for inspections and repairs, while Train 3 was operating.

Train 3 however experienced a trip late on April 9 that lasted into April 10, an emissions report filed to regulators showed.

Additionally, LNG imports to Italy are projected to remain relatively supported as operations resume at Rovigo and Piombino terminals after maintenance, while deeper gas maintenance in Norway over the next two weeks could potentially tighten EU gas supply and stimulate LNG demand, said Ana Subasic, natural gas and LNG analyst at data and analytics firm Kpler.

Meanwhile, on spot LNG freight, both the Atlantic and Pacific rates both fell for a third consecutive week, said Spark Commodities analyst Qasim Afghan.

The Atlantic spot rate fell to $43,750/day on Friday, while the Pacific spot rate eased to $46,750/day. – Reuters