Singapore: Spot prices for liquefied natural gas in Asia rose this week to their highest level this year so far, tracking gains in European gas and amid cooler temperatures in both regions.
Industry sources estimate that the average price of LNG for January delivery to Northeast Asia rose to $14.60 per million British thermal units.
Florence Schmidt, energy strategist at Rabobank London, from the Asia, Japan and South Korea Centre, said: “This week’s further escalation between Russia and Ukraine has brought a sharp risk premium back to the European gas and Asian JKM market by default, despite the uninterrupted physical gas supply.” “. Bookmark.
European benchmark gas prices at the Dutch TTF hub traded at their highest levels in a year on concerns about Russian gas supplies and as cold temperatures dented gas stocks.
At the end of last week, the Russian company Gazprom stopped gas supplies to the Austrian gas import company OMV due to a dispute over payments, while the Russian war with Ukraine intensified.
While the risk of Europe losing more Russian gas has lifted the TTF consistently above the JKM market for the first time since the end of 2022, the spread remains narrow and could move back to a JKM premium in the short term if Russian flows continue and production is halted. Schmidt added that the situation is stabilizing.
“But as the fighting intensifies this week, we could also see TTF holding its premium over JKM for a while as Europe seeks to import LNG cargoes. Either way, markets will be higher for longer.”
At least five LNG cargoes have been diverted from Asia to Europe due to rising gas prices after Gazprom halted supplies to OMV. North-east Asia delivered markets have risen in competition with Europe, with at least one tanker appearing to be heading to Asia again, said Samuel Judd, head of LNG pricing at commodity pricing agency Argus.
In Japan, while recent low temperatures have pushed up gas consumption and energy prices, restarting nuclear power could reduce reliance on gas-fired power generation and ease demand for liquefied natural gas, Rystad Energy said in a note.
The Japan Meteorological Agency still expects a 50-60% chance of above-average temperatures through November 29, she added.
Meanwhile, S&P Global Commodity Insights assessed the Northwestern European LNG daily price index (NWM) for January-delivered cargoes on a delivered-by-ship (DES) basis at US$14,800 per mmBtu on November 21, At a discount of US$0.25 per million British thermal units for the month of January. Gas price in the Dutch TTF centre.
Argus estimated the price at $14,790 per mmBtu, while Spark Commodities estimated the December delivery price at $14,635 per mmBtu.
In LNG shipping, Atlantic prices fell to $15,500 a day on Friday, erasing gains made in the past two weeks, Spark Commodities analyst Qasim Afghan said. Pacific rates fell to $23,000 per day.