Asia spot LNG prices rise on supply concerns, geopolitical tensions
Asian spot liquefied natural gas (LNG) prices rose this week as outages in LNG facilities in Australia and Malaysia sparked supply concerns, although buying interests from China remained limited due to higher price levels.
The average LNG price for October delivery into northeast Asia was at $14.00/MMBtu, industry sources estimated, up from $$13.80/MMBtu last week.
"LNG supply concerns helped to support prices in Asia and Europe. The unplanned downtime at Australia's Ichthys affecting one train is set to last into October and constraints to production at Malaysia’s Bintulu are understood to have disrupted loading schedules for the coming weeks," said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
The market was paying close attention to U.S. Freeport LNG, which had a brief shutdown after a fire safety suppression system in the control room of the pretreatment facility unexpectedly activated during routine maintenance.
"With Freeport's feedgas nominations for Thursday holding at around half of the terminal's gas demand during normal operations, traders were seeking to gauge how long the cut to production could continue," Good said.
Elsewhere in Asia, ongoing heatwaves have resulted in some interest for spot volumes from Japanese and Indian buyers for September–October delivery over the past week, said Masanori Odaka, senior analyst at Rystad Energy.
There is 70%–80% probability of above-average temperatures for most regions of Japan from Aug. 31 through Sep. 6.
In Europe, gas prices rose most of the week as a ramp-up in maintenance in Norway is curbing supplies to Europe and Britain, with some outages extended, and risks remain over Russian flows via Ukraine.
"The situation in European gas markets will remain tense in the coming week as we are yet to see the biggest curtailment in Norwegian pipeline gas deliveries as a result of maintenance. This, together with the lingering geopolitical tensions, provides little relief to the market in the short term," said Florence Schmit, energy strategist at Rabobank London.
"Lower pipeline deliveries have also raised LNG demand requirements, especially in northwest Europe with imports up 25% since the beginning of August – ensuring that competition with Asia remains strong. At the end of the day, Europe's energy crisis is being kept alive by its reliance on global energy markets," she added.
S&P Global Commodity Insights assessed its daily northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in October on an ex-ship (DES) basis at $12.438/MMBtu on Aug. 29, a $0.26/MMBtu discount to the October gas price at the Dutch TTF hub.
Spark Commodities assessed the price at $12.379/MMBtu, while Argus assessed it at $12.475/MMBtu.
Atlantic LNG freight rates were down for the third week running, falling to $60,500/day on Friday, while the Pacific rates fell to $77,500/day, said Spark Commodities analyst Qasim Afghan.
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