Asian spot liquefied natural gas (LNG) prices fell to a 20-month low on ample supplies and mild weather, encouraging some buying from price-sensitive importers.
The average LNG price for January delivery into northeast Asia was $10 per million British thermal units (mmBtu), its lowest level since April 2024, and down from $10.66/mmBtu last week, industry sources estimated.
The price for February delivery was estimated at $9.60/mmBtu.
"Ongoing robust global LNG loadings and mild weather continue to put downward pressure on Asian LNG prices," said Kesher Sumeet, senior LNG analyst at consultancy Energy Aspects.
"Northeast Asian HDDs (heating degree days) are forecast to remain below the 10-year average over the next two weeks, following a short-lived cold spell during the first week of December."
HDDs estimate demand to heat homes and businesses by measuring the number of degrees a day’s average temperature is below 65 degrees Fahrenheit (18 degrees Celsius).
Sumeet added that softer prices have encouraged some Indian buyers to increase purchases, as well as buying interest from Chinese importers.
This spot demand, however, is mostly limited to opportunistic price-sensitive demand, with northeast Asian utilities largely well stocked, said Martin Senior, Argus head of LNG pricing.
In Europe, SP Global Energy assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in January on an ex-ship (DES) basis at $8.702/mmBtu on December 11, a $0.525/mmBtu discount to the price at the TTF hub. Argus assessed the price at $8.78/mmBtu, while Spark Commodities assessed it at $8.781/mmBtu.
"Continued pressure from investment fund positioning, combined with milder temperatures and strong supplies of pipeline gas and LNG imports, is keeping the market relatively bearish, despite entering winter with lower storage levels and rapid withdrawal rates," said Aly Blakeway, manager of Atlantic LNG at SP Global Energy.
Egypt has also seen multiple diversions and a westbound cargo, adding uncertainty around its actual demand, added Blakeway.
Physical gas players are buying the TTF dip, building record net longs as commercial operators stock up on cheap feedstock, cheaper winter hedges, or a chance to lock in margins on physical operations, while hedge funds extended their net short position, said independent gas analyst Seb Kennedy.
Meanwhile, the US front-month arbitrage to Northeast Asia via the Cape of Good Hope has widened and is now more strongly pointing to Europe, while the arbitrage via Panama has narrowed to breakeven levels, said Spark Commodities analyst Qasim Afghan.
In LNG freight, Atlantic rates fell to $115,750/day, while Pacific rates eased to $84,500/day, he added.
(Reporting by Emily Chow; Editing by Harikrishnan Nair)
