Asian LNG Prices Rise for First Time Since October

LONDON, Dec 13 (Reuters) - Asian spot prices for LNG edged up this week after almost two months of declines on new demand and amid signs that the U.S. was close to reaching a trade deal with China.

(photo: PetroChina)

The average LNG price for January delivery into northeast Asia is estimated at about $5.65 per million British thermal units (mmBtu), up 15 cents from the previous week, sources said. The February price is estimated at around $5.50/mmBtu.

The Asian market is still at its lowest level seasonally.

"There was a bearish sentiment in the market for a long time, so probably people are realising now that prices have come off too much to withhold from buying," one LNG trader said.

Much of the demand came from Turkish state energy company Botas which is seeking around 30 cargoes for December to March delivery.

"The reason (for the tender) is simply the attractive LNG prices rather than a demand increase," Botas told Reuters.

A gas trader in Turkey said that the price for Russian pipeline gas is around $3.00/mmBtu more expensive that the spot LNG price, but added that the premium is seen as decreasing after the first quarter 2020.

There were also a few buying inquiries in the Far East and India within tenders and on the bilateral basis, market sources said.

Indian Oil Corp purchased a cargo slightly above$5.00/mmBtu for Dec. 22 delivery, one trader said.

Bharat Petroleum Corp Ltd, another Indian buyer, was in the market for a mid-January cargo.

Taiwan's CPC had a tender open for a limited number of participants looking for a cargo to be delivered between late January and early February, trade sources said.

Japan's Tohoku Electric Power has bought a cargo in a tender for late January delivery at around $5.60/mmBtu, two sources said.

There was also a buy tender from Malaysia's producer Petronas for a cargo to be delivered to Japan in the first half of January, they added.

China, world's second-largest buyer of LNG, had to deal with high inventory levels amid weak demand, however.

About five to seven LNG cargoes were being offered for resale in a month by Chinese buyers, with the majority of offers coming from China National Offshore Oil Corporation (CNOOC), sources said.

European Uncertainty

The energy complex was supported on Thursday on hopes the U.S. was close to reaching a trade deal with China, which has reflected in a rise in European gas prices and Asian Japan Korea Marker (JKM).

Gas prices in Europe were also buoyed by the possible threat of sanctions by the United States aimed at hampering the completion of the Nord Stream 2 pipeline linking Russia and Germany.

However, European prices plummeted next day as the European market remains oversupplied and there are hopes that Russia and Ukraine will conclude a new deal on a transit of Russian gas to Europe. The current deal expires at the end of December.

Ukrainian president Volodymyr Zelenskiy said this week Kiev and Moscow could reach an agreement on a new deal before the end of the year, seeing scope for compromise between their respective demands.

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