U.S. Markets open in 5 hrs 47 mins

GLOBAL LNG-Asian spot prices soften on sufficient stock

·2 min read

By Marwa Rashad

LONDON, Sept 23 (Reuters) - Asian spot liquefied natural gas (LNG) prices continued to fall this week as Japan and Korea remain well supplied at least until October, while the market awaits signals of a Chinese demand rebound.

The average LNG price for November delivery into north-east Asia was 42 per million British thermal units (mmBtu), down $4, or 8.7% pct, from the previous week, industry sources estimated.

"We could see further price decline, with the bulk of start of winter being already booked. Weather will be a factor and of course, China, could make an appearance," said Toby Copson, global head of trading and advisory at Trident LNG.

In Europe, a combination of high inventory levels and governments' efforts to curb demand are keeping the Dutch gas benchmark at much lower levels compared to a month ago.

"It is fair to say that Europe has prepared itself as best as possible for the upcoming winter demand," said Hans van Cleef, senior energy economist at ABN Amro.

"However, many uncertainties remain, not only regarding the remaining Russian gas flows towards Europe, but also whether the current LNG inflow can be maintained and when for instance colder weather starts to kick in Asia," he added.

A cold winter in Europe may push prices back to record high levels.

S&P Global Commodity Insights assessed LNG prices on a delivered ex-ship (DES) basis into northwest Europe (NWE) at $38.374/mmBtu on Sept. 22, a discount of $20.3/mmBtu to November gas price at the Dutch TTF hub.

Meanwhile, Spark Commodities assessed the LNG DES price for northwest Europe for October at $38.931/mmBtu, a discount of $21.02/mmBtu to the TTF October price.

In the United States, strong domestic gas production is helping to improve supply in the domestic market, said Ryhana Rasidi, gas and LNG analyst at data and analytics firm Kpler.

"With Cove Point LNG potentially (in Maryland) undergoing routine maintenance in October, we could see LNG feedgas demand fall and contribute to bearish Henry Hub prices until the facility returns online; including Freeport LNG which is expected to partially restart in November," she said.

U.S. LNG export volumes fell to 9.4 billion cubic feet per day (bcfd) in August, from nearly 12 bcfd earlier this year, directly affecting European deliveries, Rystad Energy said in a report, adding that the risk of extraordinary events including a hurricane or winter freeze are not off the table, increasing market nervousness ahead of winter.

Spot LNG freight rates in the Pacific continued to move higher, rising to 205,750 per day on Friday, 49% higher than the previous week, as the market continues to tighten on the cusp of winter, according to Henry Bennett, head of pricing at Spark Commodities.

The Atlantic rates rose 22% on a weekly basis to $166,250 per day on Friday. (Reporting by Marwa Rashad; Editing by Nina Chestney)