LONDON, Nov 25 (Reuters) – Spot prices for liquefied natural gas (LNG) in Asia rose this week for the first time since September and reached a 7-week high, trailing European gas prices on cooler weather forecasts and after how Gazprom threatened to further cut gas flows to Europe.
Industry sources estimate the average price of LNG for January delivery to Northeast Asia was $31 per million British thermal units (mm Btu), up $5.5, or 25.5%, from the previous week.
“Asian rates jumped significantly mid-week this week amid price cap news and upward pressure on European prices,” said Toby Kopson, head of global trading and advisory at Trident LNG.
“I expect there will be some decline in the first month if more Chinese cities are closed and temperatures remain moderate. If we do see a cold snap, we may see a resurgence to cover short-term downturns,” he added.
In Europe, S&P Global Commodity Insights (SPGCI) estimated its Northwest Europe LNG Marker (NWM) daily benchmark price target for November Free Ship (DES) shipments at $29,056/MMBtu on November 24, a discount of 10 USD. /mm BTU to the January gas price at the Dutch TTF hub, according to Kiaran Rowe, global director of LNG.
“While NWM is discounted to JKM in the physical spot market, the forward curves for the two benchmarks show Europe (NWM) is above Asia (JKM) until Q3 2023, implying current market sentiment that Europe will be the main destination for cargo during this period,” Rowe said.
EU energy ministers failed to agree on a gas price cap on Thursday and delayed other European Commission proposals, such as joint gas purchases and accelerated renewable energy permits, until a meeting scheduled for December 13.
“If the price cap is approved at the proposed level of -275 EUR/MWh, this will not change the status quo, as the chances of a price cap being introduced seem very small. (However) this can still endanger the market. speculation and is not keeping prices from hitting new record highs in the winter,” said Rihana Rasidi, gas and LNG analyst at analyst firm Kpler.
Alex Frawley, liquefied natural gas analyst at data analytics company ICIS, said Europe’s overall position remains fairly stable, with a substantial backlog of about 28 vessels waiting to be delivered offshore Europe.
Frawley said that despite the storage backlog, Europe is attracting rare cargo from the Pacific Basin: the Woodside Rees Withers LNG arrived off the coast of Spain with a cargo from Australia, the first direct Australian cargo to Europe since 2012.
Another ship, BW Paris, appears to be carrying Indonesian cargo to Europe, which will be Europe’s second in history after another ship headed to France in early November.
LNG charter rates have dropped sharply this week, with both basins down more than 20% as longer-than-expected delays at Freeport and the continued decline in floating storage have freed up vessels for the spot market, according to Henry Bennett, global head of the division. pricing. at Spark Commodities.
The Atlantic fell to $375,750 on the day on Friday, while the Pacific fell to $356,250 on the day. (Reporting by Marva Rashad; editing by Christina Fincher)