Asian spot prices for liquefied natural gas (LNG) plummeted to multi-year lows this week, pressured by a lack of demand to consume abundant supplies.
As milder-than-usual winter in both Asia and Europe is curbing demand, there were deals done below $4.00 per million British thermal units (mmBtu) this week, the lowest level in more than 10 years.
The average LNG price for March delivery into northeast Asia was estimated at around $4.00 per mmBtu, down $0.60 per mmBtu from the previous week, several sources said.
“Warm winter is a clear reason for such a low price,” an LNG trader said.
The Brunei LNG export plant sold a cargo for March 30-31 delivery at about $3.90 to $3.95 per mmBtu earlier in the week. Commodity trader Vitol sold a cargo to BP on Friday for March 22-26 delivery at $3.95 per mmBtu in the S&P Global Platts Market on Close window.
The deal prices are at their lowest level in Asia since summer 2009, according to data from S&P Global Platts that assesses the Japan-Korea-Marker (JKM) price. With the first half of March holding a slight premium to late March, the average price for that month is at the lowest level since April 2016, according to the same data.
Demand is expected to remain low in Asia next week, with Chinese buyers largely out of the market due to the Chinese New Year and Spring Festival holidays.
With the global gas market heavily oversupplied, new cargo offers further saturated the market. Several sellers issued multi-cargo tenders this week, with a number of one-cargo offers on the market as well.
Russia’s Gazprom has offered 18 cargoes for loading at Belgium’s Zeebrugge terminal between the second half of Feb. 2020 and Dec. 31 2021.