LNG Asian spot prices fall as Novem­ber car­goes off­loaded

Times of Oman - - MARKET -

LON­DON: Asian spot LNG prices fell this week as sell­ers strug­gled to off­load the last of their Novem­ber car­goes and Chi­nese de­mand for De­cem­ber sup­plies failed to ma­te­ri­alise sig­nif­i­cantly af­ter a frenzy of Asian buy­ing last month.

Novem­ber spot liq­ue­fied nat­u­ral gas (LNG ) fell 50 cents to $10.50 per mil­lion Bri­tish ther­mal units (mmBtu) though trades were sparse and the bid­of­fer spread was wide. De­cem­ber prices were cited as low as $10.50 al­though a trade was heard at around $11.10.

Crude, which was head­ing for a first weekly fall in over a month as part of a global mar­ket rout, also weighed on LNG as many con­tracts are linked to the oil in­dex.

Spot Asian LNG spiked last month in an­tic­i­pa­tion of win­ter de­mand af­ter a hot sum­mer de­pleted stock­piles. China was seen as pro­vid­ing sup­port to prices af­ter the coun­try got caught short last win­ter with its stor­age ca­pac­ity still low.

How­ever, that has not been the case so far this month.

“China has been pac­ing down sup­plies, so as not to spike prices again,” said one LNG trader. “Stor­age is a fact but I guess they are re­plac­ing vol­umes a lit­tle wiser than last win­ter.”

An­other trader said a Novem­ber cargo was bought by Osaka Gas for $10 per mmBtu al­though the Ja­panese util­ity had a wide de­liv­ery win­dow and qual­ity spec­i­fi­ca­tion to make the sale at­trac­tive to sup­pli­ers.

“There’s some dis­tressed sell­ers out there; the bid of­fer spread is wide,” said one LNG trader.

Turkey’s Bo­tas closed a ten­der on Fri­day for 13 car­goes to be de­liv­ered in the first week of each month from Novem­ber to Fe­bru­ary, ac­cord­ing to sev­eral sources.

In the ab­sence of a surge in de­mand, sup­plies were so far healthy go­ing into the win­ter months, traders said. Ja­pan’s In­pex said last week it had shipped its first con­den­sate cargo from the mam­moth Ichthys LNG project in Aus­tralia, which was seen as a pre­lude to LNG ex­ports.

Rus­sia’s Ya­mal fa­cil­ity in the Arc­tic pumped a record 2.4 mil­lion tonnes of LNG in Septem­ber and op­er­a­tor No­vatek said its third train would be­gin op­er­a­tions in De­cem­ber, some 6 months ahead of sched­ule.

Traders say Ya­mal’s re­stric­tions lie more in the num­ber of Arc­tic-class ves­sels avail­able to ship the LNG than out­put. Two more Arc7 ves­sels, the Ge­orgiy Brusilov and the Boris Davy­dov are now un­der­go­ing sea tri­als be­fore join­ing Ya­mal, ac­cord­ing to Refini­tiv Eikon data.

The start-up of a num­ber of ex­port projects in the United States will also add to sup­ply, with some still ex­pect­ing the first car­goes from Che­niere En­ergy’s Sabine Pass 5 and Cor­pus Christi 1 to hit the spot mar­kets this year.

Sev­eral traders men­tioned the pri­vate ten­ders of multi-year strips from Cor­pus Christi 2, ex­pected to be­gin op­er­a­tions next year, and Do­min­ion En­ergy’s Cove Point.

Full story @ time­so­fo­man.com/busi­ness

- Reuters file pic­ture

WIN­TER DE­MAND: Spot Asian LNG spiked last month in an­tic­i­pa­tion of win­ter de­mand af­ter a hot sum­mer de­pleted stock­piles.

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