Asian spot liquefied natural gas prices slipped to a fresh 20-month low this week, weighed by weak demand in the region and ample supplies.
The average LNG price for February delivery into northeast Asia was $9.50 per million British thermal units, down from $10/mmBtu last week to its lowest since April 2024, industry sources estimated.
"The decline was driven by continued softness in Northeast Asian gas demand," said Nelson Xiong, analyst at data and analytics firm Kpler, adding that firm Chinese pipeline gas supplies and strong Japanese renewable power generation contributed to LNG demand weakness.
"We expect JKM prices to remain slightly bearish. Warmer-than-seasonal temperatures across Northeast Asia are likely to weigh on heating demand, while Pacific LNG supply remains ample," he said, referring to the benchmark Japan-Korea-Marker price assessment for spot physical cargoes in Asia.
The dip in prices had spurred some buying from price-sensitive importers last week. But demand from China has not significantly emerged, with many pointing to the mid-$8/mmBtu as their target import level, said Argus head of LNG pricing Martin Senior.
In Europe, SP Global Energy assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $8.881/mmBtu on December 18, a $0.54/mmBtu discount to the price at the TTF hub. Argus assessed the price at $8.93/mmBtu, while Spark Commodities assessed the January price at $9.009/mmBtu.
"Fundamentally, the market remains well supplied, buoyed by robust pipeline gas flows and a strong influx of spot US LNG into Europe. However, sentiment has stayed guarded amid forecasts for colder conditions early in the new year," said Aly Blakeway, manager of Atlantic LNG at SP Global Energy.
As Europe enters winter with lower storage levels than in recent years, buyers may be compelled to step up LNG procurement in January and February, Blakeway added.
"While a surge of offers has weighed on prompt pricing, buying interest has also firmed, with strong bidding emerging in the East Mediterranean for early-2026 delivery, driven by weaker renewable output and rapidly eroding gas stocks."
Meanwhile, hedge funds deepened their net short position in TTF futures last week, but dialled back the rate of short buying as cooler weather and supply outages curbed bearish sentiment, said independent gas analyst Seb Kennedy. Commercial operators continued buying the dip, extending their record net long position to a new all-time high, he added.
In LNG freight, Atlantic rates fell for a third straight week to $92,000/day, while Pacific rates eased to $75,750/day, said Spark Commodities analyst Qasim Afghan.
The US front-month arbitrage to Northeast Asia via the Cape of Good Hope and the arbitrage via Panama are both pointing toward Europe, he added.
(Reporting by Emily Chow; Editing by Leroy Leo)
