Spot prices in Asia hit a 7-week high, tracking price moves in Europe


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LONDON – Asian liquefied natural gas (LNG) spot prices rose this week for the first time since September and hit a 7-week high, following European gas prices on cooler weather forecasts and after Gazprom reported threatened to further reduce gas flows to Europe.

The average price of LNG for January delivery in Northeast Asia was $31 per million British thermal units (mmBtu), up $5.5, or 25.5%, from the previous week, according to industry sources.

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“Asian yields rose this week with a significant mid-week jump following the price cap announcement and upward pressure on European prices,” said Toby Copson, global head of trading and market development. consultant at Trident LNG.

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“I expect a drop to occur initially for the previous month if more Chinese cities lock down and temperatures stay mild. If we see a cold spell, we could see a resurgence to cover the dips at short term,” he added.

In Europe, S&P Global Commodity Insights (SPGCI) has pegged its Northwest Europe LNG Marker (NWM) daily benchmark price, for cargoes delivered in November on an ex-ship (DES) basis, at $29.056/mmBtu on November 24, a $10/mmBtu discount to the January gas price at the Dutch TTF hub, according to Ciaran Roe, global head of LNG

“While NWM is discounted to JKM in the physical spot market, the forward curves of both benchmarks show Europe (NWM) to be above Asia (JKM) until the third quarter of 2023, implying a current market view that Europe will be first. destination of shipments during this time,” Roe said.

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EU energy ministers failed to agree on a gas price cap on Thursday and postponed the adoption of other European Commission proposals, such as the joint purchase of gas and the acceleration of renewable permits, at a meeting scheduled for December 13.

“If a price cap is approved at the proposed level -275 euros/MWh- it will not really challenge the status quo since the chances of the price cap being triggered seem very slim. (However) this could still expose the market to speculation and will not deter prices from reaching new highs during the winter,” said Ryhana Rasidi, gas and LNG analyst at data analytics firm Kpler. .

Alex Froley, LNG analyst at data intelligence firm ICIS, said Europe’s overall position remains quite healthy with a substantial order book of around 28 vessels awaiting delivery off Europe.

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Froley said that despite the storage backlog, Europe is attracting rare cargo from the Pacific basin: the LNG ship Woodside Rees Withers arrived off the coast of Spain with cargo from Australia, the first direct Australian cargo to Europe since 2012.

Another ship, the BW Paris, appears to be carrying Indonesian cargo to Europe, believed to be the second to Europe in history after another ship headed for France in early November.

LNG freight rates saw steep declines this week as both basins fell more than 20%, longer than expected delays from Freeport and the continued reduction in floating storage freed up vessels for the spot market, according to Henry Bennett, global price manager. at Spark Commodities.

The Atlantic rate on Friday fell to $375,750/day while the Pacific rate fell to $356,250/day. (Reporting by Marwa Rashad; Editing by Christina Fincher)

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