Asia spot LNG prices rise on stronger northeast Asian demand

(Reuters) - Asian spot LNG prices rose more than $3 this week to a near nine-month high, supported by increased demand from northeast Asian buyers and amid tensions in the Middle East.

The average LNG price for December delivery into north-east Asia <LNG-AS> rose 23% to $17.90 per million British thermal units (mmBtu), industry sources estimated, its highest levels since early February.

"This week, Japanese LNG stocks held by power utilities are ramping up, with the help of above-normal temperatures in the past few weeks. Chinese LNG imports jumped this week as the Golden Week holiday concluded and we could expect some additional restocking to take place ahead of the heating season," said Ryhana Rasidi, LNG analyst at Kpler.

Supply concerns have eased now that a second round of Australian strikes have been called off, and "stable Asian prices" are forecast going forward, Rasidi added, as northeast Asian buyers are likely to prioritize stock building ahead of the winter season.

Demand for LNG in northeast Asia also ticked up in recent days as some buying interest emerged for December in the region, said Auguste Breteau, deputy head of LNG pricing at commodity pricing agency Argus.

"Several majors were heard to be long for November and short for December, according to market participants, which could push some cargoes to float into December," said Breteau.

Japanese industry organizations are concerned about the Israel-Gaza conflict which could impact global LNG supplies.

"Since the Middle East is a major producing region of natural gas as well, we are very concerned about the supply issues from the Middle East, combined with worries over the fuel supply from Russia due to the war in Ukraine," Kazuhiro Ikebe, chairman of Japan's federation of electric utilities, told a news conference on Friday.

Ikebe, who is also president of Kyushu Electric Power, said he believes his company has secured sufficient LNG for this winter as its largest suppliers are Australia and Indonesia.

In Europe, S&P Global Commodity Insights assessed its daily northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in December on an ex-ship (DES) basis at $16.152/mmBtu on Oct. 19, a $0.80/mmBtu discount to the December gas price at the Dutch TTF gas hub, Shermaine Ang, global LNG markets lead, said.

"While bullish sentiments remained from the recent events like damages to the Balticconnector pipeline and Middle East tensions, market sources pointed to ample gas storage levels in Europe," Ang said.

Meanwhile, news of European parties signing longer-term contracts for LNG from Qatar helped to push prices of longer-term contracts "somewhat lower," said Hans Van Cleef, chief energy economist at PZ – Energy.

"The forward prices for the period 2026-2030 dropped in recent weeks as these signals of better security of supply start to weigh."

QatarEnergy on Wednesday signed a supply deal with Shell to deliver 3.5 million metric tons of LNG a year for 27 years to the Port of Rotterdam in the Netherlands, beginning in 2026. The deal mirrors one reached with TotalEnergies last week, which will see LNG delivered to the Fos Cavaou LNG receiving terminal in southern France.

Meanwhile, spot LNG freight rates fell for a fourth consecutive week. The Atlantic rates fell to $132,250/day on Friday, while the Pacific rates eased to $129,500/day, said Qasim Afghan, analyst at Spark Commodities.

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