LONDON- Asian spot liquefied natural gas (LNG) prices fell last week but remained at a near nine-month high as geopolitical risks raised market concerns despite full inventories and a mild start to winter.
The average LNG price for December delivery into north-east Asia fell 4.2 percent to $17 per million British thermal units (mmBtu), its highest level since mid-February, industry sources estimated.
“As fears of war in the Middle East causing supply disruption slowly begins to wane, attention once again is drawn to the approaching tank top storage levels,” said Dominic Gallagher, head of LNG broking at Tullett Prebon.
“We are still stuck somewhere between political risk and solid stocking levels now seen across Europe and into Asia,” he said.
Toby Copson, head of energy, APAC, at commodities broker Marex said that rates in the East continue to slide on downside pressure from full inventories and lack of general demand.
“Adding to slippage rate, North Asia is experiencing a very warm winter onset. We might maintain this trajectory until heating demand is sufficient enough to bring the utilities in, which likely won’t be until the first quarter(of 2024),” Copson said.
In Europe, market fundamentals remain fairly comfortable, with storage nearly full and cargoes building up offshore, but prices are holding onto a risk premium due to the conflict in the Middle East and as a long, cold winter could still strain global supplies, said Alex Froley, LNG analyst at data intelligence firm ICIS.