Asia’s Spot LNG Prices Drop 11% This Week Amid Low Demand  

• Asian LNG benchmark prices fell almost 11% this week.
• LNG prices in Asia have declined for 3 consecutive weeks.
• Interest in spot LNG cargoes is weak despite the drop in prices in recent weeks.

Mild weather and weak demand for natural gas in North Asia sent Asia’s spot LNG prices tumbling by 10.7% this week from last week, for a third consecutive week of declining prices, industry sources told Reuters on Friday.

The average price of LNG for February delivery into northeast Asia stood at $25 per million British thermal units (MMBtu) this week. That’s 10.7% lower, or $3/ MMBtu lower, than last week, according to estimates from industry sources.   

Interest in spot LNG cargoes is weak despite the drop in prices in recent weeks, analysts say. Inventories are at comfortable levels, while the mild start to the year in most of the northern hemisphere also helps to keep inventories higher than usual, dragging spot LNG prices down.

If the trend of falling spot prices continues, some speculative buying from South Asian customers can begin as buyers could decide to take advantage of low prices, Toby Copson, global head of trading at Trident LNG, told Reuters.

According to Copson, spot LNG prices in Asia could continue falling in the coming weeks until the Lunar New Year – which falls on January 22 this year. After the festive period in China, demand could start rising as China gradually re-opens, Copson told Reuters.

Natural gas prices slumped this week in Europe and the U.S., too, due to mild weather. The benchmark U.S. natural gas prices tumbled again on Thursday to the lowest level in nearly a year on warmer-than-normal weather. 

Natural gas prices in Europe have also plunged due to a mild start to the year. The benchmark European price at the TTF hub dropped on the first trading day of the year to its lowest level since February 21, 2022, days before the Russian invasion of Ukraine.

On Wednesday, the benchmark European gas price dropped to below €70/MWh ($73/MWh) “as mild weather and reduced demand drive a counter seasonal rise in gas stocks,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted. “In addition, German power generation from wind has hit a record 47GW, around 83% of total domestic consumption.”  

By Charles Kennedy for Oilprice.com

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