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Asian spot LNG prices fall as markets prepare for Trump-Putin summit

Asian spot LNG prices fell this week due to weak demand, high storage inventories, and the markets' anticipation of the meeting between U.S. president Donald Trump and Russian President Vladimir Putin.

Average LNG price for September deliveries into North-east Asia Industry sources estimate that the price per million British Thermal Units (mmBtu) was $11.65, down from $11.90/mmBtu a week ago.

Estimated contract price for October delivery: $11,45/mmBtu

This (meeting), not only may be crucial for Ukraine, but also for the fates of Russian sanctions and the economic development between both nations. "It may not surprise anyone that Russia will open discussions on Arctic LNG 2 as this is the clearest link between LNG markets and Russia," said Klaas Dozeman of Brainchild Commodity Intelligence.

Two of the three trains at Russia's Arctic LNG 2 terminal, sanctioned by the United States and currently under sanctions, have been installed. If these sanctions were to be loosened it could add quickly to global supplies.

Martin Senior, head LNG pricing at Argus, stated that the Russian Yamal and Sakhalin LNG terminals, which export around 30 mtpa, could face future sanctions if they were boosted.

Arturo Regalado is a senior LNG analyst with Kpler.

He said that a lack of progress would raise concerns about tighter sanctions against Russian energy and possible secondary U.S. Tariffs on Russian Oil and Gas Buyers.

Dozeman explained that while the weather in Asia has become slightly warmer, it hasn't attracted large spot purchases. This is partly because of the pressure on oil price. Long-term LNG contracts with oil indexes are now competitive against spot sales.

Beijing Gas bought two cargoes at a price below $12/mmBtu, according to Argus Senior. Last year, the firm said it considered LNG imports above $12/mmBtu to be too expensive.

According to Kpler's Regalado, prices are expected to fall next week due to high Chinese inventories, which continue to dampen demand in north-east Asia. Seasonal temperatures and stable Pacific supply also add to the negative tone.

Gas prices in Europe at the Dutch TTF Hub were trading within a narrow range Friday, as the heatwave on the continent began to subside and markets focused on Trump-Putin's meeting.

S&P Global Commodity Insights estimated its daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in September ex-ship on August 14. This represents a $0.415/mmBtu reduction from the September futures prices at the TTF Hub.

Spark Commodities set the price at $10.534/mmBtu while Argus put it at $10.540/mmBtu

The U.S. Arbitrage to North-East Asia via Cape of Good Hope still encourages U.S. cargos for delivery to Europe. Qasim Afghanistan, Spark Commodities analyst, says that the arbitrage via Panama also points to Europe.

The global LNG freight rates were relatively stable, Afghan said. Atlantic rates were assessed at $36,000/day while Pacific rates were $33,250/day. (Reporting and editing by Nina Chestney; Marwa Rashad)

(source: Reuters)