LNG Prices Linger at 7-Month Lows Despite High Asian Imports

Ample supply is keeping spot LNG prices in Asia around the lowest level in seven months, defying seasonal patterns in which prices spike in peak winter.  

Last week, the average LNG price for March delivery into northeast Asia was up by $0.10 week-on-week to $9.60 per million British thermal units (MMBtu), remaining close to the seven-month low of $9.50 per MMBtu from the previous week, according to estimates from industry sources quoted by Reuters.  

For a third week in a row, Asia’s spot LNG prices remained below the $10/ MMBtu threshold, despite the season–peak winter in north Asia.

Comfortable inventories and reduced demand, coupled with high exports from the top LNG exporters the U.S., Australia, and Qatar, are keeping prices muted.

Asia’s LNG imports were estimated to have hit in December a record-high for any month in history as China regained the top importer spot from Japan and lower spot prices incentivized purchases.

Imports of LNG into Asia rose to 26.5 million metric tons in December, per data from commodity analysts Kpler reported by Reuters columnist Clyde Russell.

In January this year, Asia is estimated to have imported LNG volumes of 26.13 million tons, close to the record-high level from the previous month.

But supply has also increased, especially from the United States and Australia, Reuters’ Russell notes. U.S. LNG exports are estimated to have reached a record high in December and the second-largest volumes in January, according to the data Russell quoted.

Outside Asia, demand in Europe is tepid, with industries hesitant about boosting natural gas consumption, although prices are now a fraction of the records seen in 2022 and Europe appears to have put the worst of the energy crisis behind.

The still high volatility in gas futures prices, compared to historical averages, and uncertainties ranging from geopolitical flare-ups in the Middle East to the U.S. pausing new LNG export project approvals, continue to be a concern for European industrial gas customers, analysts tell Bloomberg.

Weak demand from Europe’s industry, due to lower consumption and weak economies, has been one of the reasons of the gas price slump this winter, despite the peak demand period for heating.  

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Red Sea Crisis Tests China’s Sway in the Middle East
• GM Auto Dealers Call for More Hybrids As EV Market Stumbles
• Robust Non-OPEC Oil Supply Might Cap Oil Prices