Asian spot LNG prices rise as Hormuz reopening hopes fade

"Fundamentally, the supply picture hasn't changed, a handful of Gulf cargoes are making it through but nowhere near enough to matter. Demand across north-east Asia remains soft, and U.S. LNG is doing the heavy lifting on coverage," said Toby Copson, managing partner at Davenport Energy. "We are range-bound around $21 this week and directional pressure will come from geopolitical push or pull," he added. Negotiations between Iran and Oman regarding the oversight of the Strait of Hormuz are ongoing, without direct involvement of the United States. "With the prospect of fees up-ending maritime freedom, market participants seem to have lost confidence in this particular attempt to salvage the situation," said Jan-Eric Fahnrich, senior gas and LNG analyst at Rystad Energy. Prompt Asian demand has been steady, with limited requirements emerging in south Asia, said Martin Senior, head of LNG pricing at Argus. Pakistan has been on the sidelines, supported by an improved hydro situation and potential LNG-naptha, while infrastructure bottlenecks in Bangladesh have limited near-term imports. Meanwhile, Indian spot demand continues, with cargoes bought above $20/mmBtu, he said. In Europe, gas prices hovered around €61 per megawatt hour (MWh), or around $20.60 /mmBtu, as the market struggles to refill depleted storage facilities. European gas market fundamentals are likely to remain strained and increasingly challenged by multiple factors including maintenance at LNG terminals in France until early September and upcoming maintenance work in Norway scheduled throughout that month, said Yahdian Falah, portfolio strategist at Germany-based energy trading company Trianel. European gas storage remains at a historically low levels. "A sustained reopening of LNG flows out of the Gulf would significantly ease the competition with Asian buyers and thus sustained pressure on TTF. Until it happens, TTF is likely to remain at elevated levels," he added. S&P Global Energy assessed its daily Northwest Europe LNG price benchmark for cargoes delivered in September on an ex-ship basis at $20.255/mmBtu on Thursday, a $0.340/mmBtu discount to the front-month price at the Dutch TTF gas hub. Spark Commodities assessed the price at $20.105/mmBtu, a $0.330/mmBtu discount while Argus assessed it at $20.26/mmBtu, a discount of $0.360/mmBtu. In LNG freight, Atlantic rates fell to $40,000/day and Pacific rates fell to $69,500/day, said Spark Commodities analyst Qasim Afghan. U.S. Gulf Coast prompt cargoes are currently priced at $19.070/mmBtu, he added. The U.S. front-month arbitrage to north-east Asia via the Cape of Good Hope is still firmly pointing to Europe, while the arbitrage via Panama is open and pointing to Asia, Afghan said. Asian spot liquefied natural gas prices rose this week as hopes faded for a quick re-opening of the Strait of Hormuz after the United States threatened an indefinite naval blockade of Iran. The average price for September delivery into north-east Asia LNG-AS was estimated at $21.30 per million British thermal units (mmBtu), up from $20.40/mmBtu last week. The price for October delivery is estimated at $21.10/mmBtu, industry sources said.

Asian spot LNG prices rise as Hormuz reopening hopes fade

Supply tightness persists in Europe and Asia

Freight and arbitrage favor Europe from the U.S. Gulf

Asian spot LNG prices rise on fading Hormuz reopening hopes

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