LNG market poised for buoyant recovery, says Al Attiyah Foundation

Asian spot prices for liquefied natural gas (LNG) have risen for a third consecutive week and touched their highest since January, buoyed by higher oil prices and firm demand from China and Europe. The average LNG price for July delivery into Northeast Asia was estimated at about $12.10 per million British thermal units (mmBtu), up $1.15 from the previous week.

LNG prices are poised for more gains as gas-hungry China consumes cargoes to feed a rebound in economic growth, while the easing of coronavirus-induced restrictions restores industrial demand in India. Higher oil and coal prices have also helped lift global gas prices, with spot Asian LNG prices doubling in just three months. China imported more than 7 million tonnes of LNG in May, a record for that month, and looks set to import more over the next two months, driven by strong industrial activity. Tokyo Gas, Japan’s biggest city gas provider, may boost storage capacity using LNG tankers, Chief Financial Officer Hirofumi Sato told Reuters in April, potentially lifting imports.

Utilities in Japan, the world’s top LNG importer, faced a power crisis last winter which caused LNG prices to spike to record highs. India’s gas consumption has been recovering in June after declining in the previous two months, as states ease restrictions in the wake of a drop in coronavirus infections. Europe’s LNG demand remains robust too, as imports are expected to refill storage levels which hit multi-year lows recently on pipeline supply concerns, stemming from rising Russia-Ukraine tensions and a surging carbon market which may spur power producers to opt for LNG over coal, Fitch Solutions said.

US natural gas futures jumped over 4 percent to a seven-month high on Friday on forecasts for rising exports, hotter weather and higher air conditioning demand over the next two weeks. Front-month gas futures rose 14.7 cents, or 4.7 percent, to settle at $3.30 per mmBtu, their highest close since October 30, 2020. Furthermore, with European and Asian gas prices both trading over $10 per mmBtu, analysts said they expect buyers around the world to keep purchasing all the LNG the United States can produce.
Source: The Peninsula Qatar

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