KUALA LUMPUR, Jan 24 (Reuters) - Asian spot liquefied
natural gas (LNG) prices were little changed this week, as ample
inventories and mild weather capped demand from East Asian
buyers.
The average LNG price for March delivery into north-east
Asia rose slightly to $14.00 per million British
thermal units (mmBtu), industry sources estimated.
"Demand in Asia remains tepid, with East Asia demand
relatively constrained amidst warmer-than-usual weather," said
Pang Lu Ming, Rystad Energy senior analyst, adding that local
forecasts indicated that South Korea and Japan would see
above-normal temperatures through to early and mid-February.
While southern China will also experience warmer-than-normal
temperatures in coming days, colder temperatures will be seen in
parts of the north, said Pang.
East Asian inventories remain ample.
"Activity from Japanese players remains subdued, implying
sufficient winter inventories for existing forecasts," Pang
added, saying South Korean and Chinese players also continued to
report sufficient inventories for winter.
In Europe, S&P Global Commodity Insights assessed its daily
North West Europe LNG Marker (NWM) price benchmark for cargoes
delivered in March on an ex-ship (DES) basis at $14.589/mmBtu on
Jan. 23, a $0.37/mmBtu discount to the March gas price at the
Dutch TTF hub.
Argus assessed the price at $14.61/mmBtu, while Spark
Commodities assessed the February price at $14.594/mmBtu.
Natasha Fielding, head of European gas, LNG and biomass
pricing at Argus, noted European delivered LNG prices had
increased their premium over northeast Asian markets, pointing
to storm disruption to U.S. loadings and higher summer
restocking demands following a German proposal to subsidise
summer injections.
Freeport LNG also closed its export plant in Texas on
Tuesday due to a power feed problem during a winter storm.
The European premium has further incentivised firms to ship
uncommitted LNG cargoes in the Atlantic basin to Europe instead
of Asia, and could start to pull Middle Eastern supply away from
Asia too, Fielding added.
LNG freight rates fell to record lows, with Atlantic rates
dropping for a third straight week to $9,000/day on Friday
driven by an influx of newly built vessels and the directing of
U.S. spot cargoes to Europe, said Spark Commodities analyst
Qasim Afghan.
Pacific rates fell to $15,500/day.
The U.S. arbitrage to northeast Asia via the Cape of Good
Hope for February widened, again indicating that U.S. cargoes
have an incentive to deliver to Europe, Afghan added. He also
noted that the Qatar front month arbitrage to Northeast Asia had
closed out for the first time in almost two years, also
incentivising deliveries to Europe over Asia.