GLOBAL LNG-Asian spot LNG prices ease but remain near four-year high

By Marwa Rashad

LONDON, Nov 6 (Reuters) - Asian spot liquefied natural gas (LNG) prices eased this week but remained near a four-year high amid competition from Europe for supply ahead of winter and as the market closely monitors the geopolitical situation in the Middle East.

The average price for December delivery into north-east Asia was estimated at $31.40 per million British thermal units (mmBtu) in the week to November 6, down from $32.50/mmBtu in the previous week, which was the highest since mid-December 2022.

"The whole market remains structurally tight heading into winter, with disrupted Middle Eastern supply and weaker European storage increasing competition for flexible cargoes," said Toby Copson, managing partner at Davenport Energy.

"Asian buyers are likely to remain selective at current price levels, with European demand and supply security concerns continuing to influence where marginal Atlantic cargoes are directed. U.S. exports are helping, but are not yet sufficient to offset the supply deficit." he added.

Prices are expected to increase slightly next week, supported by stronger Indian gas-for-power demand, declining Japanese utility inventories, coal outages, and potential winter restocking requirements, said Ronald Pinto, principal LNG and gas analyst at Kpler.

Regional appetite for LNG will be partly capped by China's stable coastal LNG inventories, secured Bangladeshi supplies, and limited Pakistani spot demand. However, geopolitics will be the main price mover, particularly following the U.S. mid-term elections, with both increased attacks and de-escalation on the table, he added.

Many market players wager U.S. President Donald Trump is less likely to order fresh strikes after Republicans lost control of Congress.

Lower Asian demand and increased LNG flows through the Strait of Hormuz have made Europe a more attractive destination for cargoes, increasing supply offers there, said Martin Senior, head of LNG pricing at Argus.

In Europe, benchmark gas prices at the Dutch TTF hub hovered around €86 per megawatt hour on Friday, almost 17% down since touching €104/MWh last week.

"Prices have fallen over the past week, partly because of an apparent shift in tone towards de-escalation from Trump and of increased Qatari supply expectations, with loadings well above half of capacity," Senior said.

European storage remains a key source of support, with inventories currently 74% full, well below the seasonal average, leaving a smaller buffer heading into winter, said Aly Blakeway, head of Atlantic LNG at S&P Global Energy.

S&P Global Energy assessed its daily Northwest Europe LNG price benchmark for cargoes delivered in December on an ex-ship basis at $29.065/mmBtu on November 5, a $0.560/mmBtu discount to the front-month price at the Dutch TTF gas hub.

Argus assessed the price at $29.110/mmBtu, while Spark Commodities assessed it at $29.301/mmBtu.

In LNG freight, Atlantic rates rose to $55,250/day and Pacific rates rose to $32,750/day, said Spark Commodities analyst Qasim Afghan.

The U.S. front-month arbitrage to north-east Asia via the Cape of Good Hope continues to point firmly to Europe. The Nigerian prompt arbitrage, also via the Cape, is also more firmly pointing to Europe, he added.