June 22, 2024
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Asian LNG Prices Rise on Stronger Demand

Liquefied natural gas (LNG) spot prices in Asia experienced an uptick this week due to heightened demand driven by soaring temperatures in both northern and southern China, according to Reuters.

Consequently, European buyers adjusted their bids, offering relatively narrow discounts to attract sellers.

Industry sources estimated the average LNG price for June delivery into northeast Asia to be $10.50 per million British thermal units (mmBtu), up from $10.40/mmBtu the previous week.

Ryhana Rasidi, an LNG analyst at data analytics firm Kpler, attributed the price increase to news of the Gorgon LNG outage but suggested that its short-term impact might be limited.

Rasidi anticipated downward pressure on prices due to the current low-demand shoulder season in Europe and northeast Asia, where gas/LNG stocks remain ample for the time being.

Last week, Chevron Australia reported efforts to restore full production at its Gorgon gas facility following a mechanical fault that caused one LNG production train to go offline. Analysts predict that the affected production train could remain offline for up to five weeks.

Meanwhile, South Korean and Japanese buyers opted to withhold from the spot market, relying instead on high terminal inventories to meet surging domestic demand.

In the United States, Samuel Good, head of LNG pricing at commodity pricing agency Argus, noted an increase in production at the Freeport LNG export terminal. Despite planned maintenance at the country’s Cameron terminal, feedgas supply levels indicated near-capacity operation at the Freeport facility.

In Europe, gas storage facilities are nearly 63% full, positioning the continent favorably during the net injection season.

Pricing benchmarks for LNG deliveries in June varied slightly among agencies, with S&P Global Commodity Insights assessing the North West Europe LNG Marker (NWM) price at $9.587/mmBtu on May 9, Argus at $9.60/mmBtu, and Spark Commodities at $9.548/mmBtu.

LNG freight rates exhibited a lack of clear direction, with slight decreases observed in both the Atlantic and Pacific basins. Henry Bennett, chief operating officer at Spark Commodities, highlighted the continued low spot charter rates and the abundance of open carriers in the prompt market. This scenario has reduced the opportunity cost for subletting spare shipping, with delivery to Asia offering the potential for firms to recoup at least some fleet costs.

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