Asian spot liquefied natural gas prices were little changed this week as high inventories and softer demand offset regional cold snaps and the risk of further sanctions on Russian LNG.
The average LNG price for December delivery into north-east Asia was $11.20 per million British thermal units (mmBtu), up from $11.10/mmBtu last week, industry sources estimated.
"An early cold snap in North China lifted prompt demand and added regional price support," said Kpler analyst Go Katayama.
"Next week, price downside from stronger domestic gas production and high inventories in China, along with softer demand in Thailand is offset by the upside from additional heating-driven demand from cold spells in Korea and northern China, and latest sanction risk on Russian LNG," he added.
European Union countries adopted a 19th package of sanctions against Russia this week, including a ban on Russian LNG imports, and the US imposed sanctions on Russia’s oil majors.
In Japan, stronger heating demand is expected later this month as temperatures are forecast to fall below seasonal averages, but this is yet to translate into additional spot demand, said Martin Senior, head of LNG pricing at Argus.
In Europe, gas prices on Friday gave up gains from the previous session — which were driven by concerns over the impact of sanctions on Russian energy supply — with no changes to the short-term supply and demand picture.
TTF trade was subdued in the week ending October 17. The net long positions of hedge funds and commercial players were largely unchanged, reflecting confidence in Europe’s near-term gas supply outlook, said independent gas analyst Seb Kennedy.
However, the number of funds holding positions increased to a new record high of 438, raising the potential for big moves, Kennedy added.
Prices are expected to remain stable next week, with ample LNG and pipeline supply keeping the market well supplied and strong wind generation putting downward pressure on gas-for-power demand, offset by lower-than-average temperatures and renewed geopolitical tensions, Kpler’s Katayama said.
Heading into winter with lower storage than the previous two years, Europe may see strong demand from Central and Eastern Europe this winter as it looks to replace the lost Russian volumes over the heating season, said Aly Blakeway, manager of Atlantic LNG at SP Global Commodity Insights.
SP Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in December on an ex-ship (DES) basis at $10.534/mmBtu on October 23, a $0.55/mmBtu discount to the December futures price at the TTF hub.
Argus assessed the price at $10.550/mmBtu, while Spark Commodities assessed the October price at $10.421/mmBtu.
The US front-month arbitrage to north-east Asia via the Cape of Good Hope is prompting US cargoes to deliver to Asia, said Spark Commodities analyst Qasim Afghan.
Global LNG freight rates in the Atlantic rose for the second week running, now at $34,500/day. Pacific rates rose for the first time in nine weeks to $28,250/day, he added.
(Reporting by Marwa Rashad. Editing by Mark Potter)
