Asia spot LNG at fresh three-month high on supply concerns
(Reuters) - Asian spot LNG prices rose this week to a new three-month high due to supply concerns amid tensions in the Middle East and a drop in feedgas deliveries to two LNG terminals in the U.S.
The average LNG price for June delivery into north-east Asia LNG-AS rose to $10.50 per million British thermal units (mmBtu), its highest since Jan. 12, industry sources estimated.
Prices hit a 15-week high earlier this week, slightly exceeding $11.00/mmBtu, tracking gains in European gas markets, but have softened since then.
"Spot gas prices have been strong over the last week due to the ongoing conflict in the Middle East and its impact on oil prices; a series of feedgas dips at U.S. LNG plants; Norwegian outages and Egypt's switch back to import mode," said Alex Froley, senior LNG analyst at data intelligence firm ICIS.
"Higher oil prices would push up the price of oil-linked LNG import contracts still common in Asia. The U.S. feedgas falls could indicate lower production and exports, though they may only be short-lived," he added.
Explosions echoed over an Iranian city on Friday in what sources described as an Israeli attack, but Tehran played down the incident and indicated it had no plans for retaliation - a response that appeared gauged towards averting region-wide war.
The rise of LNG prices above the $10.00/mmBtu threshold again has curbed Asian buyers' demand for spot cargoes, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
"In turn, this closed the inter-basin arbitrage again even with low spot charter rates - which also fell slightly over the week - already heavily limiting the premium needed for Asian markets to draw Atlantic spot supply away from Europe," he said.
In Europe, gas prices saw strong gains earlier in the week, mainly driven by concerns over Freeport LNG and cooler weather forecast for the rest of April, suggesting ample scope for a brief mid/late April resurgence in heating demand, Good added.
On March 20, Freeport said its Train 2 liquefaction unit had been shut down, while Train 1 will be taken down imminently as it expects inspections and any subsequent repairs at both the units to be completed by May.
Traders said there was lower feedgas at Sabine Pass LNG export unit in Cameron Parish, Louisiana, but said it was likely a short-term outage.
S&P Global Commodity Insights assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in June on an ex-ship (DES) basis at $9.996/mmBtu on April 18, a $0.12/mmBtu discount to the gas price at the Dutch TTF hub.
Argus assessed the June delivery price at $9.9/mmBtu, while Spark Commodities assessed May delivery at $9.860/mmBtu.
On spot LNG freight, both the Atlantic and Pacific rates were steady this week, with the Atlantic spot rate estimated at $44,000/day on Friday and the Pacific spot rate at $46,250/day, said Spark Commodities analyst Qasim Afghan,
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