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Asia spot prices slightly rise amid high inventories and muted demand

Asian spot prices for liquefied gas have dropped to their lowest levels in eight weeks due to a continued low demand and large inventories. This follows a decline in European gas prices in anticipation of a peace agreement in Ukraine.

Average LNG price for delivery to North-East Asia in January Industry sources estimate that the price per million British Thermal Units was $10.90, down from $11.66/mmBtu in the previous week.

Toby Copson is the managing partner of Davenport Energy. He said, "Rates continue to soften and buying remains muted mainly due to muted physical demand, weak fundamentals, and muted rates."

He said that the weather would dictate movement, as temperatures fluctuated but weren't consistently low enough to bring provincial buyers to the spot market.

Ronald Pinto is the principal gas and LNG analyst for data analytics firm Kpler. He said that prices in Asia will remain low next week due to high inventories, a weak Korean gas demand, and a muted South and Southeast Asian spot market.

He said that the robust Pacific supply, and Japan's approval for the Kashiwazaki - Kariwa restart, further capped upside. He was referring to the news that Japan's Kashiwazaki - Kariwa nuclear plant, which is the largest in the world, could restart as early as January, subject to regional authorities' consent.

Gas prices in Europe are at their lowest levels for 18 months, and have fallen below 30 euros per megawatt-hour.

The news of renewed efforts to broker a peace deal between Russia, Ukraine and the United States has sparked this decline as a result of an expectation of a relaxation in sanctions against Russia," said Florence Schmit.

She added, "While this market movement may be premature but it sets the trend for prices in 2026."

Kpler’s Pinto says that the bearish trend in EU gas prices is likely to continue into next week, as the warmer weather, increased wind output, and abundant LNG and pipeline supplies ease regional balances. Meanwhile, market participants await Russia’s response to US-Ukraine's plan.

Martin Senior, Argus' head of LNG prices, believes that a peace agreement between Russia and Ukraine may lead to the suspension of supplies from Russia's 19,8 million metric tonnes per annum Arctic LNG 2.

Botas, which had already purchased four cargoes earlier this week for delivery in the first quarter next year, has made a demand from Turkey. Senior revealed that Egypt has also expressed an interest in the product, and had purchased four cargoes to be delivered by December.

S&P Global Energy's daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in January, on an ex ship (DES) basis, was $9.467/mmBtu as of November 27. This represents a $0.46/mmBtu reduction from the price at TTF hub.

Spark Commodities rated the December price as $9.416/mmBtu.

According to Spark Commodities analyst Qasim Afghan, the U.S. arbitrage for the front-month to North-East Asia via Cape of Good Hope strongly points to Europe while the arbitrage through the Panama Canal marginally points to Asia.

The global LNG freight rate in the Atlantic has risen to $146.750/day. This is its highest level for the year. Pacific rates reached their highest level since December 20,23 at $89 250/day.

(source: Reuters)