Asian spot LNG prices pass $10 mmBtu as global supplies tighten

London (Quantum Commodity Intelligence) – Spot prices for liquefied natural gas (LNG) crossed the $10 per million British thermal units (mmBtu) for the first time since January on Monday, as gas consuming nations build up inventories ahead of the peak-demand summer season.

June delivery cargoes into Asia were quoted in the $10-$10.50/mmBtu, around $0.50 higher from early May levels, as the strong uptrend continues.  

Securing LNG supplies ahead of peak demand periods of the year has become a major consideration for buyers, after last winter’s record volatility and spot prices.

Leading vessel tracker and analytics firm Kpler reported last week that with both TTF and JKM benchmarks at above $9 MMBtu, prices were almost double the five-year seasonal average.  

European stocks and imports slump

‘Global LNG markets are heating up,’ said Kpler, ‘…weak arrivals into Europe are likely to tighten the market further.’

Kpler further noted that April LNG imports into Europe were down 8% year-on-year at 8.57 million/mt, adding May imports could drop a further 1 million/mt from April.

‘This could further tighten the market as natural gas storage across Europe remains at a 3-year low, with storage caverns only 31.6% utilized,’ said Kpler in a research note.

JKM is the usual benchmark for Asia, while TTF acts as a European gas benchmark.

JKM had been trading at below $5/MMbtu in Q4 2020, but the winter demand surge saw prices rally to record levels, including a cargo trading at an all-time high of around $39/mmBtu in mid-January.