• 4 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 7 minutes Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 13 minutes NordStream2
  • 1 min Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 3 hours California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 16 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 4 days "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 2 days U.S. : Employers Can Buy Retirement Security for $2.64 an Hour
  • 2 days Nord Stream - US/German consultations
  • 408 days Class Act: Bet You've Never Seen A President Do This.
  • 4 days An Indian Opinion on What is Going on in China
  • 4 days Can Technology Keep Coal Plants Alive and Well?
  • 1 day Forecasts for Natural Gas
  • 2 days Australia sues Neoen for lack of power from its Tesla battery
  • 4 days Storage of gas cylinders
  • 5 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
Hungary And Ukraine Butt Heads Over A New Natural Gas Deal

Hungary And Ukraine Butt Heads Over A New Natural Gas Deal

Ukraine’s ambassador to Hungary has…

Why Isn’t Russia Sending More Gas To Europe

Why Isn’t Russia Sending More Gas To Europe

Despite pledges to send more…

Two Reasons European Natural Gas Prices Climbed So High

Two Reasons European Natural Gas Prices Climbed So High

With European natural gas prices…

Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

More Info

Premium Content

LNG Spot Prices In Asia Spike To Four-Year Highs

Asian spot liquefied natural gas (LNG) prices continue their upward trajectory, reaching seasonal highs not seen since mid-2014 when global oil prices were trading over $100 per barrel. This time, however, spot prices aren’t spiking on the back of exorbitantly high global oil prices but come as buyers in North Asia compete for cargoes with Mexico and Egypt amid supply outages from global producers.

Production setbacks in the United States, Australia and Malaysia also tightened supply, while recent LNG trading volumes in Asia have also been supported by the restocking of depleted inventories by South Korean and Japanese utilities after an unseasonably cold winter.

Spot-LNG refers to LNG that is traded on a cargo to cargo basis, and does not mean term
contracts of LNG (so-called long, medium, and short-term contracts). Long term LNG contracts are priced to an oil-indexation formula thus are more sensitive to swings in global oil prices than spot prices. However, spot prices are also affected to some degree by changes in oil prices.

Spot LNG prices for July delivery in North Asia spiked some $1.80 per million British thermal units (MMBtu) last week to settle at $11.60/MMBtu – a massive increase for the super cooled fuel and a seasonal four year high. This time last year prices hovered just under $6/MMBtu.

Sharp price gains forced portfolio LNG players and end-users in Asia to urgently fill short positions, paying well in excess of $11.60/MMBtu, Reuters said in a report. One source at an Asian producer said that producers were offering August cargoes at $12/MMBtu. Related: Iran Looks To Veto Saudi, Russian Oil Production Proposal

Japan Korea Marker (JKM) prices for LNG hit $11.40/MMBtu last week, increasing by 95 cents on Thursday, the largest single-day price movement for the Asian benchmark since March 2011.

Unseasonably high prices

The price increases are exceptional since they come during spring months in the Northern Hemisphere when LNG demand is usually tepid. Demand for LNG and consequently its price increases during cold winter months in North Asia and drop considerably during milder spring months, and often pick back up to some degree again during hot summer months amid more air conditioning usage.

The concern now for LNG users and traders is that high mid-year prices could translate to even higher prices for the upcoming winter season. Related: Shale Drillers’ $7 Billion Hedging Error

North Asian buyers, Japan, China, and South Korea represent the three largest LNG buyers in the world, with that demand growth projected to increase even more as China buys more natural gas to offset record air pollution levels in its urban centers and per Beijing’s mandate that gas make up at least 10 percent of the country’s energy mix by 2020.. Further gas earmarks are set for 2030. China’s LNG imports for the first four months of 2018 were up almost 60 percent compared to the same period last year.

In December, China passed South Korea to become the world’s second largest importer of LNG. According to commodities data provider S&P Platts Global, China imported 5.05 million mt of LNG, up 38.25 percent year on year, registering its single highest ever monthly import volume since it started importing LNG in 2006.

China’s increased LNG procurement could also shorten the ongoing supply glut of the super cooled fuel that until around a year ago was projected to last until round 2022, even later. China’s gas demand is projected to triple to more than 400 bcm by 2040 from 210 bcm in 2016, the Paris-based International Energy Agency (IEA) said in November, a development that has already altered gas markets in Asia, and even globally.

By Tim Daiss for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News