Heat waves in some parts of Asia and forecasts of above-average temperatures in southeast Asia and China in the coming weeks have prompted more spot LNG buying, which has raised the spot prices in Asia this week to the highest level since early January.
The average LNG spot price for delivery into northeast Asia in July has increased this week to $10.90 per million British thermal units (MMBtu), according to estimates from industry sources cited by Reuters.
This week's average spot LNG price in Asia is higher than last week's average of $10.50 per MMBtu and the highest level since January 5, 2024.
"Asian delivered prices have edged higher in the past few days," Samuel Good, head of LNG pricing at commodity pricing agency Argus, told Reuters, citing increased demand from buyers in Southeast Asia and stronger European benchmark gas prices as reasons for the rise in Asia's prices.
An ongoing heatwave in India, Vietnam, and other countries in south and Southeast Asia are prompting higher demand for spot LNG cargoes from utilities.
In Europe, the Dutch TTF futures, the benchmark for Europe's gas trading, were supported by above-average temperatures in some parts in western Europe, the upcoming planned maintenance at the giant Troll gas field offshore Norway, and a decline in wind power generation.
At the end of last month, portfolio managers boosted their bullish bets on Europe's benchmark natural gas price to the highest level in six months, expecting continued volatility as Europe is now beginning to stockpile supplies for the next winter.
Money managers have been concerned that unplanned outages in Norway during the summer, higher natural gas demand in Asia, and the end of the current gas transit deal for Russian pipeline gas to flow via Ukraine at the end of 2024 could sap gas supply for Europe and boost prices.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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