Asian, European LNG prices crash below $5 on oversupply

March 21, 2019

By Sabina Zawadzki

LONDON (Reuters) – Asian spot prices for liquefied natural gas (LNG) broke below the $5 per million British thermal unit (mmBtu) mark this week following a 13-week price slide that reflects the absence of growth in demand or any major outages.

Spot prices for May delivery to Northeast Asia dropped 80 cents to $4.65 per million British thermal units (mmBtu) this week according to traders although there were few actual transactions with Asia’s biggest buyers, Japan, Korea or China.

Asian LNG spot prices are now at their lowest level since May 2016 and close to the lowest point in Refinitiv records going back to 2010 of $4.00 per mmBtu, which was reached in April 2016.

They are also lower than the European natural gas hub price in the Netherlands and Britain, which usually trade at a premium to spot Asian LNG prices. The last time this happened was in January and February of 2015, according to Refinitiv Eikon data.

There were two transactions completed in the Platts market on close (MOC) window, both cargoes to India.

The first one was sold by Vitol to Gunvor for Indian west coast delivery at the start of May for $4.55 per mmBtu. Vitol also sold to Glencore a cargo to Dahej terminal for the end of May at $4.75 per mmBtu.

In Europe, prices were heard at discounts of 20 cents to month-ahead Dutch gas prices at the TTF hub, which were at around $4.98 per mmBtu on Thursday.

Deliveries into North West Europe have jumped to 67 cargoes, or 4.24 million tonnes, this month from 54 cargoes in January, which was a record high for the region since Refinitv Eikon data began in 2013.

The influx has helped to halve prices at both the Dutch and British hubs since their peaks in September.

The market has been inundated with supplies coming onstream from the United States, Russia and Australia. In addition Egypt, which has had to import LNG in previous years due to gas shortages, has started to ramp up its exports.

A cyclone heading for north western Australia may disrupt LNG loading there, according to Kpler, a shipping intelligence company.

Vessels have been cleared at Dampier, loading point for Woodside’s Pluto and North West Shelf LNG, and Ashburton, the loading point for Chevron’s Wheatstone LNG, according to Pilbara Port Authority.

(Reporting by Sabina Zawadzki. Editing by Jane Merriman)

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