GLOBAL LNG-Asian spot prices further rise on firm demand, hovers near 4-yr top

By Emily Chow

SINGAPORE, Oct 23 (Reuters) - Asian spot liquefied natural gas gained for a third consecutive week to a fresh multi-year high on firm northeast Asian demand amid colder weather forecasts, while concerns over geopolitical risks from the ongoing US-Iran conflict persist.

The average price for December delivery into northeast Asia was estimated at $30.50 per million British thermal units (mmBtu), up from $29.30/mmBtu last week and its highest levels since December 2022.

Prices could still go higher next week as near-term fundamentals strengthen alongside a persistent geopolitical risk premium, said Kesher Sumeet, senior analyst at Energy Aspects.

"Colder weather forecast across Europe in early November could accelerate storage withdrawals. Northeast Asia also faces colder-than-normal forecasts, although ample inventories should limit near-term LNG competition, with risks shifting towards later months as stocks decline."

Asian demand has risen further than European demand this week, increasing inter-basin competition, said Martin Senior, head of LNG pricing at Argus.

Chinese spot demand has been strong over the past week, with state-owned CNOOC buying at least 11 cargoes and negotiating for more volumes over November-December to meet storage targets, while South Korea's Kogas was also seeking volumes, he added.

China has already seen sharp cooling in its north and northeast regions, with temperatures forecast to decline across its central and eastern areas, while South Korea is also seeing colder air arriving, said Rystad Energy analyst Mathieu Utting in a note.

"If this cooling proves sustained, spot LNG buying from China and South Korea will accelerate, and European buyers will need to raise bids to hold on to Atlantic cargoes they are counting on for the winter," he said.

In Europe, S&P Global Commodity Insights assessed its daily Northwest Europe LNG price benchmark for cargoes delivered in November on an ex-ship basis at $28.975/mmBtu on Thursday, a discount of $0.52/mmBtu to the price at the Dutch TTF gas hub.

Spark Commodities assessed it at $29.019/mmBtu, while Argus assessed the December price at $29.07/mmBtu.

European LNG markets scaled higher over the week amid Middle East geopolitical developments, Norwegian pipeline outages and demand from Egypt seeking five LNG cargoes for November delivery, said Aly Blakeway, head of Atlantic LNG at S&P Global Energy. GAS/OUT

While US cargoes continue to favor the Atlantic Basin, lower European gas storage, the onset of withdrawals and renewed demand elsewhere have reduced the degree of comfort seen earlier in the month, he said.

In LNG freight, Atlantic rates gained to $21,750 a day, while Pacific rates rose to $30,750 a day, said Spark Commodities analyst Qasim Afghan.

The US front-month arbitrage to northeast Asia via the Cape of Good Hope is still pointing to Europe, while the Nigerian prompt arbitrage, also via the Cape, is now pointing more firmly to Asia, he added.