Asian spot liquefied natural gas (LNG) prices were flat this week, as ample supplies and soft demand kept a lid on gains.
The average LNG price for December delivery into northeast Asia held at $11.10 per million British thermal units (mmBtu), industry sources estimated.
"Northeast Asian spot demand has been weak, with ample inventories and forecasts not too far deviated from seasonal averages," said Martin Senior, head of LNG pricing at Argus, adding that freight rates had gained this week.
"Spot charter rates have continued to rise, which has been the primary driver behind a wider spread between Asian and European prices, with Asian prices having to hold a larger premium to continue attracting the same flows," he said.
Tightness in the freight market, however, is limited to the near-term, added Senior, with forward charter rates in January less than half current spot prices.
The market is also well supplied for the time being, with cyclical heating demand in top importer China yet to emerge and marginal demand being soaked up by pipeline flows, said Toby Copson, managing partner at Davenport Energy Partners.
In Europe, SP Global Commodity Insights assessed its daily Northwest Europe LNG Marker price benchmark for cargoes delivered in December on an ex-ship basis at $10.138/mmBtu on November 6, a $0.54/mmBtu discount to the December price at the Dutch TTF hub, with prices rangebound through the week on healthy supplies, comfortable storage levels and muted demand.
Argus assessed the price at $10.17/mmBtu, while Spark Commodities assessed it at $10.129/mmBtu.
"Gas inventories in Europe have remained around 83 per cent, as gas demand is still weak due to weather conditions, but LNG imports have remained high," said Siamak Adibi, director for gas and LNG supply analytics at consultancy FGE.
Independent gas analyst Seb Kennedy said that hedge funds were now shorting TTF futures hard, as bearish pressure builds on benchmark EU gas futures.
On the supply side, US LNG loadings have reached new records while new projects are ramping up smoothly, said FGE’s Siamak, referring to projects like the recent start-up of Train 2 of LNG Canada and Golden Pass in Texas early next year.
Meanwhile, the US front-month arbitrage to Northeast Asia via the Cape of Good Hope remains just closed this week and pointing to Europe instead of Asia, but the arbitrage via Panama remains open, said Spark Commodities analyst Qasim Afghan.
In LNG freight, rates in the Atlantic rose to a new year-to-date high of $68,000/day, while Pacific rates gained to $44,500/day, also a year-to-date high, he added.
(Reporting by Emily Chow Editing by Mark Potter)