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Asian spot LNG price rises to two-week highest amid renewed demand

The price of Asian LNG spot rose for the third consecutive week to a record high. This was due to renewed demand and weak production in Malaysia, as well as Egypt's desire to secure large volumes for the remainder of the year.

Average LNG price for July deliveries into North-East Asia Industry sources estimate that the price per million British Thermal Units (mmBtu) is now $12.40, up from $11.75/mmBtu a week ago.

Alex Froley is a senior LNG analyst with data intelligence firm ICIS. He said that the market had been in a trend of rising since the recent lows it experienced at the beginning of the month. However, overall, the market remains far below its highs from mid-February.

Froley attributes the increase to the interest of Asian importers, including Bangladesh and Taiwan. He also reports that Egypt is looking to secure large quantities over the remainder of the year.

Laura Page, the head of LNG insights at Kpler, said that the Asian market continues its monitoring of LNG supply disruptions in Australia and Malaysia.

Page stated that Australia's North West Shelf Plant ceased LNG exports from May 16-22. Meanwhile, exports of Malaysia's Bintulu Complex have been in a steep decline.

She said that while some of the decrease is due to maintenance planned, the severity of it suggests there could also be a problem unplanned that affects capacity.

Martin Senior, head LNG pricing at Argus said that weekly loads at Malaysia's Bintulu had fallen to a 13-year low. A growing number of vessels are waiting off the shore to the facility, awaiting production to resume.

He also said that the hot weather forecasts in parts of North-east Asia and Southern Europe could increase early summer cooling demands.

Gas prices in Europe rose at the Dutch TTF hub this week due to maintenance by Norway and concerns about the Ukraine peace talks, which haven't seen much progress.

Kpler's Page stated that "looking ahead, TTF could increase slightly due to heavy pipeline maintenance in Norway. This is despite weather predictions anticipating strong renewable production and a gradual warming of temperatures across the continent."

Froley, ICIS, said that Europe's underground storage of gas is growing and the supply is increasing. He added that possible EU storage targets reductions would prevent major price increases, but downsides could be limited if new Asian buyers enter the market at lower prices.

S&P Global Commodity Insights estimated its daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in July ex-ship on May 22 at $11.646/mmBtu, a $0.55/mmBtu reduction from the July futures prices at the TTF Hub.

Spark Commodities set the price of July delivery at $11.467/mmBtu. Argus had the same price.

According to Spark Commodities analyst Qasim Afghan, the U.S. Arbitrage to North-East Asia via Cape of Good Hope has decreased but is still pointing to Europe. The arbitrage via Panama, however, continues to point towards Asia.

Afghan said that on Friday the LNG market saw a drop in rates to $32,000/day for Atlantic and $20,750/day for Pacific. (Reporting and editing by Nina Chestney; Marwa Rashad)

(source: Reuters)