SINGAPORE: Asian spot liquefied natural gas (LNG) prices dipped below $10 per million British thermal units (mmBtu) for the first time in nearly eight months, as ample inventories and mild weather outweighed geopolitical tensions in the Red Sea.
The average LNG price for March delivery into north-east Asia fell to $9.50/mmBtu, down almost 6% from last week, industry sources estimated.
The fall in prices, however, has spurred more spot cargo purchases by Asian buyers.
“Lower prices have incentivised a spate of tenders and purchasing by Asian buyers — a reaction not mirrored in Europe — to help slow falls and widen the spread between northeast Asian and European delivered LNG markets,” said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Pricing falls this week have been driven by weaker European gas prices, as the region looks to an exceptionally mild spell following the present cold snap, he added.
Global LNG: Asia spot prices fall to 7-month low as stocks remain plentiful
“Even with more diversions away from the Suez Canal — by Qatari and Yamal-linked carriers — from last Friday, the market has shown little reaction.”
Earlier this week, the world’s number two LNG exporter, Qatar, stopped sending tankers via the Red Sea amid growing regional tension, with at least three tankers changing courses to take the longer Cape of Good Hope route.
Two vessels owned by Russia’s Yamal LNG also diverted away from the Red Sea.
Yemen’s Iran-backed Houthi group has been attacking vessels in the Red Sea since Nov., in what the group says is an effort to support Palestinians in the war with Israel.
This part of the route accounts for about 12% of the world’s shipping traffic
Meanwhile, the amount of natural gas flowing to LNG export plants in the U.S. dropped to a one-year low this week, as an Arctic freeze caused some energy firms to divert fuel to the domestic market and as Freeport LNG’s facility in Texas experienced mechanical problems.