LNG prices in Asia stable, bullish outlook on European gas concerns

LONDON, Feb 18 (Reuters) – Spot liquefied natural gas (LNG) prices in Asia were flat for the second week in a row, but sentiment remained upbeat amid a colder weather outlook and uncertainty over the European gas supply in a context of geopolitical tensions.

The average LNG price for April delivery in Northeast Asia was $24.40 per million metric British thermal units (mmBtu), down $0.30, or 1.2%, from the previous week, industry sources said.

“Due to ongoing global gas shortages, LNG prices started the year as they ended (2021), well above seasonal norms. Historically, LNG prices are expected to decline from recent highs as the Northern Hemisphere emerges from winter,” said Jamie Maddock, Equity Research. analyst at Quilter Cheviot.

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“However, the tensions that remain to be resolved between Russia, Ukraine and the West will keep prices at a favorable price even if the conflict is avoided, preventing the reaffirmation of the fundamentals,” he added.

European LNG imports remain robust at 6.9 billion cubic meters (bcm) so far in February, after a record in January at over 10 bcm, but the continent’s overflowing LNG terminals are running out of room for more gas in the event of a supply disruption. Read more

“The big question that remains in the market is whether Europe – and mainly Germany and the Netherlands – are able to rebuild gas stocks before the start of next winter,” said Hans. van Cleef, senior energy economist at ABN Amro. Read more

With uncertainty over Russian gas exports to Europe due to risks of a Russian invasion of Ukraine, and with gas prices trading 3-4 times higher than the long-term average, l urope will still be very keen to buy LNG over the coming summer and winter. .

“As long as Russia is unwilling to increase its exports to Europe, tight market conditions will remain and keep prices high for longer. The current futures curve shows that the market does not expect too much price relaxation before the spring of 2023,” Van Cleef said. added.

In Asia, tepid demand from China during the Lunar New Year and the Winter Olympics is expected to reverse due to a recovery in industrial demand and an expected cold spell.

Rystad Energy said the cold spell in Japan and Korea has depleted LNG inventories and could generate resupply demand for April. Data from Refinitiv Eikon shows temperatures there will remain 3 to 6 degrees Celsius below normal for the next 15 days.

A breakdown of two mega trains at the Ras Laffan project in Qatar with a capacity of 7.8 million tonnes per year each is another bullish factor for the market. Read more

Atlantic Basin charter rates turned negative at -$500/day on Friday, not covering the cost of fuel to ballast the vessel to the loading port, according to Spark Commodities. Pacific rates were estimated at $17,500/day.

Elsewhere, GAIL (India) Ltd (GAIL.NS) has launched an exchange tender offering six LNG cargoes to be loaded in the United States and seeking six cargoes to be delivered to India in 2022. L8N2UQ4UA

Turkish Botas is looking for 10 Liquefied Natural Gas (LNG) shipments to be delivered between March and December. L8N2UQ4OR

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Reporting by Marwa Rashad; Editing by Nina Chestney

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