Spot prices for liquefied natural gas (LNG) delivery in Asia jumped to a six-year high this week as lower-than-normal temperatures in key LNG importers and continued growth in China’s industrial activity boost demand.
Spot LNG prices for January delivery have jumped to over $12 per million British thermal units (mmBtu) as a cold snap in parts of the major LNG importers Japan, China, and South Korea raises demand for electricity and heating.
Moreover, China’s industrial output continued to grow in November, also boosting demand for power.
The prices of LNG in Asia have recovered from less than $2/mmBtu in the spring when the winter heating season had already ended, and the pandemic created a massive oversupply of LNG globally as lockdowns heavily depressed demand for natural gas.
Last week, spot LNG prices in Asia were estimated at $11.10/ mmBtu, while this week, the price added another $1/mmBtu to the highest level since 2014 and a six-fold surge compared to April lows.
Recent unplanned supply issues at major exporters, including Qatar, Australia, and Norway, are also driving LNG prices higher.
The high LNG prices, however, are forcing some of the more-price-sensitive buyers of spot cargoes to sway away from tenders because of the too high prices.
While LNG prices are on a tear, oil prices were headed to a seventh straight week of gains on Friday, buoyed by vaccine development and the vaccine rollout in major economies, including the United States.
The U.S. Food and Drug Administration’s advisory committee recommended the use of Moderna’s vaccine on Thursday, the FDA said, adding that it would “rapidly work toward finalization and issuance of an emergency use authorization.”
Pfizer is seeking a fast-track approval of its vaccine in Japan.
At 10:08 a.m. ET on Friday, WTI Crude was up 0.58 percent at $48.64 and Brent Crude prices were up 0.37 percent at $51.73.
By Tsvetana Paraskova for Oilprice.com
