BY MARWA RASHAD
LONDON- Asian spot liquefied natural gas (LNG) prices fell to a three-week low on Friday amid lacklustre demand and a decline in European wholesale gas prices.
The average LNG price for April delivery into north-east Asia was at $14.00 per million British thermal units (mmBtu), down from $16.10 last week, and the lowest since late January, industry sources estimated.
“We have a bearish outlook for Asian LNG (prices) driven by expectations of mild temperatures for north-east Asia in March and LNG supply recovery,” said Charles Costerousse, senior LNG analyst at data analytics firm Kpler.
Martin Senior, head of LNG pricing at Argus, said that Japanese stocks have been depleted because of a recent cold spell but there has been limited spot demand for restocking.
Prices remain too high for many second tier Chinese buyers and Indian firms, capping spot demand in Asia at present, he added.
In Europe, gas prices fell to near four-week lows earlier this week but have since steadied amid US peace talks to end the war in Ukraine and as EU member states discuss the relaxation of gas storage targets.
Alex Froley, senior LNG analyst at ICIS, said market volatility still has the potential for wide price swings depending on the outcome of the Ukraine peace talks and EU storage targets.
A draft EU document showed that the European Commission will work on more flexible targets for EU countries to refill their gas storage ahead of winters after concerns that strict filling deadlines could drive up prices.
“Fundamentally, European storage remains a lot lower than the last two mild years but will be enough for the remainder of winter, though it will require a lot of gas to refill before next winter. This will keep prices supported across summer,” Froley added.
Europe could need to import up to 70 billion cubic meters (bcm) of LNG this summer to refill the sites for the next winter, said Rabobank energy strategist Florence Schmit.
“If storage targets are relaxed this yearthen the current strength of summer prices versus winter prices will dissipate,” Schmit added.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $13.927/mmBtu on February 20, a $0.67/mmBtu discount to the April gas price at the Dutch TTF hub, marking an 8 percent weekly decline. — Reuters
