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GLOBAL LNG-Asia spot prices rise on increase in European gas prices

By Marwa Rashad

LONDON, Dec 2 (Reuters) - Asian spot liquefied natural gas (LNG) prices rose for the second consecutive week on higher gas prices in Europe where a cold spell is on the horizon, but ample Asian inventories are expected to curb prices in the coming weeks.

The average LNG price for January delivery into northeast Asia was $35 per million British thermal units (mmBtu), up $4, or 13%, from the previous week, industry sources estimated.

"It's been a little choppy this week in Asia, the market pushed up from some spot activity from a major for a China cargo, however, it ended the week on a slightly bearish tone with some prompt tender awards bringing prices down to the very low 30's, setting a case for further incremental declines for December," said Toby Copson, global head of trading and advisory at Trident LNG.

"Looking at the forward curve, February seems to be where demand will come back as most seem to be well covered for January," he added.

Much of the Northeast Asian price gains this week have been driven by the rise in European LNG and gas hub prices, as the market reacts to the potential for cargo flows out of the Pacific to Europe if enough of a premium is sustained, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

In Europe, S&P Global Commodity Insights (SPGCI) assessed its daily Northwest Europe LNG Marker (NWM) price benchmark, for cargoes delivered in November on ex-ship (DES) basis, at $31.641/mmBtu on Dec. 1, a discount of $10.375/mmBtu to the January gas price at the Dutch TTF hub, according to Ciaran Roe, global director of LNG

"LNG and gas markets were higher as we entered December, with colder-than-average weather forecasted in parts of Europe and some stronger purchasing in North Asia for January delivery cargoes in the $30s/MMBtu," Roe said.

European LNG imports for the EU and Britain reached a record high of 11.14 million tonnes (~160 TWh) in November 2022, with France being the largest contributor, importing 2.6 million tonnes, said Andreas Schroeder, head of energy analytics at data intelligence firm ICIS.

"In December, we expect a similar strong intake with more than 50 cargos on their way to Europe for delivery in the coming 10 days," he added.

LNG freight rates have extended sharp declines, with both basins down more than 30% on export project interruptions, lower cargo demand and increasing prompt vessel availability, according to Henry Bennett, global head of pricing at Spark Commodities.

The Atlantic rate on Friday fell to $262,000/day while the Pacific rate fell to $243,500/day.

Argus' Samuel Good said that the closed inter-basin arbitrage for Atlantic basin cargoes set to load later this winter is already curbing vessel demand as firms are incentivised to ship their cargoes from the likes of the United States and west Africa to Europe instead of northeast Asia. (Reporting by Marwa Rashad; Editing by Devika Syamnath)