Global LNG Spot Prices Decline
From Arab News
LONDON/SINGAPORE: Asian spot liquefied natural gas (LNG) fell last week as demand from Brazil’s Petrobras slackened and top Japanese buyers switched to cheaper fuels and relied more on supplies under long-term deals.
Prices for April delivery dropped to around $18.10 per million British thermal units (mmBtu) from $19.60 per mmBtu last week.
Petrobras, a major Atlantic Basin LNG buyer in recent weeks, withdrew from the global spot market after rainfall boosted Brazil’s hydroelectric reserves and cut demand for gas-fired power generation, traders said.
Japanese utilities, meanwhile, increased deliveries of lower-cost LNG under long-term, oil-linked deals.
“Prices would rebound quickly if Petrobras had to come back into the market,” a trade source said in light of finely balanced supply-demand.
“There is no additional supply available,” he added.
Spot cargo trades were scant over the past week, resulting in a wide bid-offer spread of almost $2 per mmBtu, the same source said.
“The Asian buyers have already secured the necessary winter volumes … not only for spot deals but also (through) short-term deals,” Chubu Electric Power’s head of trading, Hiroki Sato, told Reuters this week.
“In Chubu’s case, if the spot price jumps above $18 (per mmBtu), it is better to buy oil,” he said.
Sato added that Chubu did not expect LNG demand to rise this summer due to the probable restart of some of Japan’s idled nuclear reactors.
German utility RWE appears to have bought a Norwegian LNG cargo from GDF Suez, which it has sold to Japanese utility Tokyo Electric Power, or Tepco, several sources said.
Portugal’s Galp sold a cargo to Brazil’s Petrobras for loading in mid-April at an estimated price in the mid-$16 per mmBtu level.
Galp’s offer to sell 30 LNG cargoes over a five-year period closes in March, by which time traders have to submit bids.
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