By Emily Chow
SINGAPORE, Nov 11 (Reuters) – Asian spot liquefied pure fuel (LNG) costs slipped this week as gentle temperatures and ample inventories in Asia and Europe muted shopping for exercise.
The typical LNG worth for December supply into north-east Asia was $26 per million British thermal items (mmBtu) this week, down $2, or 7.1%, from the earlier week, business sources estimated.
“Heat climate in Asia and Europe continues to weigh on costs as seasonal heating demand has but to select up,” mentioned Edmund Siau, LNG analyst at consultancy FGE.
“Inventories are at the moment excessive in each Asia and Europe, and LNG cargoes are being floated off Europe in anticipation of upper demand and costs.”
However an easing of stringent COVID guidelines in China, which have impacted financial exercise this 12 months, may increase demand.
The world’s second largest LNG importer introduced on Friday it could shorten quarantines for inbound travellers and shut contacts of contaminated individuals, and eliminated a penalty on airways for bringing in individuals with suspected circumstances.
Two business sources mentioned Glencore has gained a young supplied by Kuwait Overseas Petroleum Exploration Co (KUFPEC) at round $21 mmBtu on a free-on-board (FOB) foundation. Reuters couldn’t independently confirm the deal.
KUFPEC had final week issued a young providing a cargo for December loading from Australia’s Wheatstone plant.
In Europe, S&P World Commodity Insights assessed LNG costs on a delivered ex-ship (DES) foundation into north-west Europe at $21.646/mmBtu on Nov. 10, a reduction of $11/mmBtu to December Dutch fuel costs, mentioned world director of LNG Ciaran Roe, as excessive storage ranges and gentle climate dampen costs in Europe.
Dozens of LNG vessels which have been circling off Spain and the Mediterranean since October resulting from restricted slots to unload their cargoes are prone to keep there in anticipation of rising European fuel costs.
“Continued gentle climate in Europe is lowering demand, preserving onshore storage and that means there’s a continued backlog of floating storage vessels ready offshore the continent,” mentioned ICIS LNG analyst Alex Froley.
Whereas near-term costs are anticipated to be smooth, the market may flip round if winter climate within the first quarter subsequent 12 months will get colder, added Froley.
“There are nonetheless huge questions over how simply the market can refill storage for the winter after…. Merchants are additionally laser-focused on any information in regards to the U.S. Freeport LNG undertaking, which has been out since June. There’s nonetheless no feedgas going into the plant.”
In the meantime, spot LNG freight charges within the Atlantic rose by $7,750 to $484,750 a day, in response to Henry Bennett, head of pricing at Spark Commodities. The Pacific spot freight charges additionally rose from the earlier week by $8,250 to $439,000 per day.
(Reporting by Emily Chow; modifying by Nina Chestney)