Winter drives LNG Asian spot prices to 6yr high

Winter is driving up the price of Liquefied Natural Gas (LNG) at the Asian spot market to above $20 per million British thermal units (mmBtu), with Trafigura buying cargo from Gunvor on Tuesday at $20.8 per MMBtu, which is above the record $20.20 set in 2014.

The average LNG price for February delivery into Northeast Asia LNG-AS was estimated at about $12.50 per million British thermal units (mmBtu), up $1.30 from the previous week ($11.20), according to market data.

Asian winter has been a strong driver for higher demand for heating gas, with temperatures in Beijing, Tokyo, Shanghai, and Seoul expected to be lower than average over the next two weeks.

In Japan, power prices have surged to a fresh record high on Tuesday (with consumption higher further boosted as households open windows to prevent the spread of COVID-19, analysts say.

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Supply shortages in Malaysia, Indonesia, Norway, Nigeria, and Qatar are making China, the world’s second-largest importer of the super-chilled fuel, turn to supply from the U.S., according to traders.

The amount of U.S. gas flowing to export plants are at record levels. Local gas pipeline prices below $3 per mmBtu make the conversion to liquid profitable and is improving prospects for new projects in 2021.

However, the Nigerian LNG is missing out of this rally. NLNG sells its cargoes in future contracts sometimes up to 20 years in advance thereby missing out on opportunities in the spot market. Conversely, this insulates its cargoes from price fluctuation at the spot market.

This situation has ignited discussions among analysts about the possibility of the NLNG creating the option for some of its volumes from the Train 7 project dedicated to the spot market.

NLNG in the past has expressed misgivings about trading in the spot market.