Spot LNG prices fall on muted demand, strong inventories

FE Team | Published: December 16, 2024 00:43:16

LONDON, Dec 15 (Reuters): Asian spot liquefied natural gas (LNG) prices fell last week amid weak demand and the availability of more supply in the spot market.
The average LNG price for January
delivery into north-east Asia was at $14.50 per million British thermal units (mmBtu), down from $15.00/mmBtu last week, industry sources estimated.
The price for February delivery was
estimated even lower at $13.50/mmBtu, the sources said.
"Rates in Asia have continued to slide due to weak demand, coupled with ample storage, and exacerbated by majors
offering out for prompt into Q1 cargoes. We're likely to see further dips as the
winter has been relatively mild," said Toby Copson, an independent LNG expert.
Samuel Good, head of LNG pricing at Argus, said that purchasing interest across Asia more broadly has weakened in the face of recent higher prices. There has also been more supply offered on the spot market both from the Asia-Pacific and also the Atlantic as sellers in the basin look to Asia amid weaker European demand.
In Europe, gas prices have fallen nearly 9 per cent over the week on a sell-off in net long positions by investment funds and milder weather forecasts lowering heating demand.
"Incremental revisions to weather
forecasts for north-west Europe over the rest of this month have weighed heavily on heating demand expectations, helping to ease concerns for the region's quick underground gas storage withdrawals in recent weeks, which would have to be made up again next summer," Good said.
EU gas storage inventories are currently around 80.16 per cent full, data from Gas Infrastructure Europe showed, down from 91 per cent at the same time last year and below the 5-year average of 83 per cent.
"The question now is at what levels inventories will be at the end of the
winter and whether there will be enough time to rebuild before the next winter," said Hans Van Cleef, chief energy
economist at PZ - Energy.
"The fact is that the forward curve is in contango (where the LNG futures price is higher than the spot price) leaves no incentive to start buying gas in the
summer for storage and usage in winter 25-26. This could lead to even more upward price pressure in the course of next year," Van Cleef said.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in January on an ex-ship (DES) basis at $12.962/mmBtu on Dec. 12, a $0.14/mmBtu discount to the January gas price at the Dutch TTF hub.
Argus assessed the price at $12.900/mmBtu, while Spark Commodities assessed it at $12.914/mmBtu.