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Asian area LNG gains in the middle of cooler weather, stronger Europe gas rates

Asian area liquefied natural gas (LNG) rates rose this week to their highest level of the year so far, tracking gains in European gas and in the middle of cooler temperature levels in both areas.

The average LNG price for January delivery into northeast Asia << LNG-AS > rose to $14.60 per million British thermal systems ( mmBtu), industry sources approximated.

This week's additional escalations between Russia and Ukraine have returned a steep threat premium to European gas and by default Asia's JKM market, regardless of actual gas supplies being continuous, stated Florence Schmit, energy strategist at Rabobank London, of the Asian Japan-Korea-Marker standard.

European benchmark gas prices at the Dutch TTF center have been trading at 1 year highs on concerns over Russian gas supply and as cold temperature levels decreased gas stockpiles.

Russia's Gazprom last weekend stopped gas supplies to Austrian gas importer OMV in a disagreement over payments, while Russia's war with Ukraine heightened.

While the danger of Europe losing more Russian gas has lifted the TTF regularly above the JKM market for the first time since end-2022, the spread remains narrow and could turn back to a JKM premium in the short-term if Russian flows continue and the circumstance stabilizes, included Schmit.

However offered the increase of combating this week we might equally see the TTF preserve its premium over the JKM for a while as Europe scrambles to import LNG freights. In any case, markets will be greater for longer.

At least 5 LNG cargoes have actually diverted from Asia to Europe on greater gas costs after Gazprom halted supplies to OMV. But northeast Asian provided markets have risen in competitors with Europe, with at least one diverted carrier appearing to have switched back to head for Asia once again, said Samuel Good, head of LNG pricing at commodity rates firm Argus.

In Japan, while lower temperatures have actually recently caused higher gas intake and power rates, nuclear restarts could lower reliance on gas-fired power generation and ease LNG need, said Rystad Energy in a note.

It included that the Japan Meteorological Company still projections a 50-60% likelihood of above-average temperature levels until Nov. 29.

Meanwhile, S&P Global Product Insights examined its day-to-day North West Europe LNG Marker (NWM) price benchmark for cargoes provided in January on an ex-ship (DES) basis at $14.800/ mmBtu. on Nov. 21, a $0.25/ mmBtu discount to the January gas price at. the Dutch TTF center.

Argus assessed the price at $14.790/ mmBtu, while Spark. Products assessed the December shipment cost at. $ 14.635/ mmBtu.

In LNG freight, Atlantic rates fell to $15,500/ day on. Friday, erasing gains made in the last 2 weeks, stated Glow. Products expert Qasim Afghan. Pacific rates declined to. $ 23,000/ day.

(source: Reuters)