GLOBAL LNG-Asian spot LNG prices at highest level in nearly 4 years amid competition with Europe

By Marwa Rashad

LONDON, Oct 16 (Reuters) - Asian spot liquefied natural gas prices rose to their highest level in nearly four years as attacks on vessels near the Strait of Hormuz and escalating competition between Europe and Asia for cargoes kept the global gas market on edge ahead of winter.

The average price for December delivery into north-east Asia was estimated at $29.30 per million British thermal units (mmBtu), its highest level since December 23, 2022 and up from $26.50/mmBtu last week.

"Persistent risks around the Strait of Hormuz continue to underpin the geopolitical premium embedded in gas prices," said Arturo Regalado, senior LNG analyst at Kpler.

Despite an increase in transits via the Strait of Hormuz since September, as well as loadings at Qatar's Ras Laffan facility, continued attacks on tankers and uncertainty over safe passage are keeping prices supported, he said.

"With the disruption likely to persist into winter, competition for flexible LNG supply remains an important bullish factor," he added.

Some tankers continue to exit the Gulf but the situation remains volatile, said Alex Froley, senior LNG analyst at data intelligence firm ICIS.

"Accordingly, the competition between Europe and Asia for flexible cargoes remains strong, as evidenced by increased mid-Atlantic course change activity," he added.

For example, LNG tanker Shra’ouh, which was heading around Africa to India, switched back north signalling for the UK, but has recently turned back south again, likely for Asia, Froley said.

Martin Senior, head of LNG pricing at Argus, said Asian demand has been supported, with Chinese and South Korean buyers stepping into the market for spot cargoes, supporting inter-basin competition, driving European gas prices higher.

South Asian imports are still strong, but spot demand has fallen slightly, he said.

In Europe, gas prices hovered around €88.57 per megawatt hour (MWh), or $29.20/mmBtu, on Friday afternoon, its highest intra-day level since December 2022.

"Even with recent warm weather and recovery in Gulf LNG flows to 30% of pre-conflict levels, our European perimeter will still enter winter with storage at record low of 74%," said Morgan Stanley analysts in a report.

Morgan Stanley raised its winter TTF forecast to €90/MWh this week and said it could reach €135/MWh on a combination of a prolonged Qatar outage, colder weather or other LNG disruptions. NG/EU

S&P Global Energy assessed its daily Northwest Europe LNG price benchmark for cargoes delivered in November on an ex-ship basis at $27.825/mmBtu on Thursday, a $0.580/mmBtu discount to the front-month price at the Dutch TTF gas hub.

Argus assessed the price at $27.860/mmBtu, while Spark Commodities assessed it at $27.818/mmBtu.

In LNG freight, Atlantic rates were largely flat at $20,500/day. Pacific rates dropped to $27,000/day, said Spark Commodities analyst Qasim Afghan.

The US front-month arbitrage to north-east Asia via the Cape of Good Hope has narrowed, largely driven by the JKM-TTF premium rally this week, but still points to Europe. The Nigerian prompt arbitrage, also via the Cape, is now more firmly pointing to Asia, he added.