Asian spot liquefied natural gas (LNG) prices fell this week from a four-month high as a ceasefire between Israel and Iran reduced the risk of supply disruption.
The average LNG price for August delivery into north-east Asia (LNG-AS) was at $13.10 per million British thermal units (mmBtu), down from $14.00/mmBtu last week, which was the highest level since February 21, industry sources estimated.
“We have a stable to slightly bearish outlook (for Asian prices). A sustained Iran–Israel ceasefire would lower geopolitical risk, refocusing on weak demand in China and South Korea,” said Charles Costerousse, senior LNG analyst at data analytics firm Kpler.
Asian prices premiums to Europe have risen over the past week despite the risk of the Strait of Hormuz being closed falling but a rise in charter rates in the Atlantic basin has curbed a swathe of mid-Atlantic diversions, said Martin Senior, head of LNG pricing at Argus.
In Europe, gas prices have continued to fall this week.
“The focus has shifted therefore back to weather developments, with increased natgas demand expected due to warmer weather in Europe. Furthermore, the filling of gas inventories is going relatively smoothly but will remain a point of attention in the months to come,” said Hans Van Cleef, head of energy research at EqoLibrium.
Aly Blakeway, manager of Atlantic LNG at S&P Global Commodity Insights, said a steady flow of LNG cargoes and healthy pipeline gas supply are meeting power generation needs and contributing to the replenishment of Europe’s underground gas storage ahead of winter.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in August on an ex-ship (DES) basis at $11.362/mmBtu on June 26, a $0.365/mmBtu discount to the August futures price at the TTF hub.
Argus assessed the price for August delivery at $11.380/mmBtu, while Spark Commodities assessed the July price at $11.320/mmBtu.
In the U.S. market, Kpler’s Costerousse said the outlook for Henry Hub prices remains bearish as traders are looking past the current heatwave and focusing on a milder early July forecast.
The U.S. arbitrage to north-east Asia via the Cape of Good Hope is marginally pointing to Europe, while the arbitrage via Panama continues to point to Asia for the fourth week running, said Spark Commodities analyst Qasim Afghan.
In the LNG freight market, Atlantic rates remained relatively steady at $48,750/day on Friday, while Pacific rates continued to rise and were assessed at $42,500/day, Afghan added.
Source: Reuters