Global LNG-Asian prices jump on continued upside risk in European gas market

Asian LNG prices jumped this week, despite tepid Asian demand, as upside risk in European gas market remains a key driver directing price movement. 

The average LNG price for February delivery into Northeast Asia rose to $48.3 per metric million British thermal units (mmBtu), up $5, or 11.5% from the previous week, industry sources said. 

Demand in Asia remained muted with buyers avoiding the spot market due to soaring prices and as high inventory levels among utilities in Japan and China exceed multi-year highs.

European spot gas prices hit another all-time high this week after the Yamal pipeline that normally brings Russian gas to heat homes and power electricity generation in Germany reversed direction and started to flow into Poland.

Prices fell on Thursday as expectations of the arrival of several LNG gas tankers helped offset low exports from Russia.

"At the moment milder weather and good stock levels in Asia are allowing some cargoes to be freed up for Europe, albeit at a high price. This may continue next week, but it can't be guaranteed throughout the winter as a whole," said Alex Froley, LNG analyst at data intelligence firm ICIS.

"If east Asia turns colder in January or February competition for flexible volumes would soon re-ignite," he added

At least ten cargoes of LNG have recently been diverted from Asia to head west drawn by Europe's record high prices amid supply concerns ahead of peak winter demand, industry sources said.

"Continued weak gas flows from Russia to Europe throughout Spring and early Summer are dampening hopes of increased supply availability during much of the injection period and are keeping Europe reliant on LNG," said Kaushal Ramesh, senior analyst At Rystad Energy, adding this suggests continued high price environment throughout 2022.

Pacific LNG freight spot rates fell over 26% week-on-week to $117,500 per day, according to data intelligence firm Spark Commodities on muted Asian demand. Prices had hit a record high of $374,500 per day in November.

Elsewhere in the market, Gail (India) has issued a tender to buy LNG cargoes on a delivered ex-ship (DES) basis for delivery into India and offering cargoes for loading from the U.S.

Thailand PTT is seeking up to two LNG cargoes per month for delivery in January and February.

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