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Asian spot prices drop on weak demand and ample supply

The Asian spot price of liquefied gas (LNG), due to a weak demand and abundant supply, fell this week. It was the lowest it has been in more than a year.

Average LNG price for delivery to North-East Asia in November Industry sources estimate that the price per million British Thermal Units (mmBtu) was $10.60, down from $11.20/mmBtu in the previous week. It is also at its lowest level since May 2024.

Kesher Sumeet is an analyst with Energy Aspects. He said that the demand signals in Northeast Asia are muted because countries are well-stocked. This, along with the strengthening of global LNG exports, are reducing supply competition between Europe and Asia.

Martin Senior, Argus' head of LNG pricing, says that while extended holidays are causing a slowdown in demand in China and South Korea, the low prices this week have stimulated some demand from India and Thailand.

The tenders that close on October 3 are for spot cargoes to be delivered through mid-November by Indian Oil Corp, PetroVietnam Gas and Thailand's Gulf Energy.

In Europe, S&P Global Commodity Insights set its daily Northwest Europe LNG Marker benchmark price for cargoes to be delivered in November ex-ship at $10.999/mmBtu. This was a $0.63/mmBtu reduction from the November price at TTF's Dutch hub.

Spark Commodities rated the price at $10.183/mmBtu while Argus rated it at $10.14/mmBtu.

The JKM-TTF spread has been pushed to a TTF Premium in recent days due to the continued weakness of Asian LNG demand. This is being amplified further by the expectation of an increased LNG volume in the New Year, said Florence Schmit.

Schmit said that the increased supply of LNG on the market is due to the flow from the sanctioned Arctic LNG 2 U.S.-Russia project.

Ronald Pinto, analyst at Kpler, is bearish on the TTF front month contract for the coming week. He believes that the pipelines in Norway and Algeria will be able to supply more gas as the maintenance is completed, and the strong wind output, coupled with rising temperatures, should limit the demand of gas, thereby supporting storage injections.

Gassco, the Norwegian gas operator, said that it anticipates high gas supplies to Europe in winter despite a temporary reduction of capacity at its Kollsnes plant.

Seb Kennedy, an independent gas and LNG analyst, noted that hedge funds reduced their bets for higher TTF gas price, by reducing their position net, which is reflected in the fact that market fundamentals are weakening in Europe.

He added that commercial players, including utilities and producers, increased their net-long position to its highest level since February 2024 in order to reduce risks and because of discretionary trading.

Max Glen-Doepel, Spark Commodities analyst, says that the U.S. front-month arbitrage to Northeast Asia via Cape of Good Hope still only marginally encourages U.S. cargoes delivered to Europe.

He said that the Atlantic LNG rates increased to $22,750/day last Friday while Pacific LNG rates dropped to $24,500/day.

(source: Reuters)