SINGAPORE, Dec 17 (Reuters): Asian spot liquefied natural gas (LNG) prices fell to a four-month low last week on the back of high inventories and weak demand in both Asia and Europe, despite a cold snap causing below-freezing temperatures across most of China.
The average LNG price for January delivery into Northeast Asia fell 18 per cent to $12.70 per million British thermal units (mmBtu) from $15.50 last week, industry sources estimated. The average LNG price for February delivery was estimated at $11.90/mmBtu.
"Weak fundamentals in Europe continue to impact JKM prices in my view," said Siamak Adibi, principal consultant at consultancy FGE, referring to the LNG benchmark price assessment for spot physical cargoes in Asia.
"Barring any unplanned outages for LNG or pipelines, the combination of high storage levels and increased wind power generation in Europe will exert downward pressure on (Dutch gas hub) TTF prices, Northwest Europe LNG, and consequently JKM."
However, with cold weather and low temperatures appearing in North Asia, pockets of demand are creeping in for February cargoes, said Toby Copson, head of energy APAC at commodities broker Marex.
A cold snap that began at the start of this week extended its grip over China on Friday, with temperatures plummeting to below freezing across most of the country, causing authorities to limit traffic flows on highways in several provinces after vehicles collided on icy patches.
While milder weather across Europe has consistently kept prices on a negative trajectory, added Copson, "we're seeing more on-water volumes, indicating a potential contango market (in) the first half of 2024".
A contango market structure means that front-month prices are below that of later-delivery contracts, which gives traders an incentive to buy and store fuel to sell at higher prices when supplies shrink.
Spot LNG prices slip on weak demand
FE Team | Published: December 17, 2023 23:43:45
Spot LNG prices slip on weak demand
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