Page 6 - EurOil Week 40 2021

EurOil COMMENTARY EurOil

LNG prices hit new

record highs

LNG spot prices in Asia rose to a new record high on September 30 as high

demand and low supply trends persist

GLOBAL ASIAN LNG spot prices have hit new record per 1,000 cubic metres). This breaks the previous
highs once again, as demand continues to rise record of $32.50 per mmBtu ($898.95 per 1,000
WHAT: while supply remains constrained. cubic metres), which was reached in mid-Jan-
LNG spot prices in Asia The price trends illustrate the recent vola- uary 2021 according to the agency. It comes
have hit new record tility of the LNG trade, with demand taking a after spot prices fell to a record low of $1.85 per
highs. hit last year amid the first wave of the corona- mmBtu ($51.17 per 1,000 cubic metres) in May
virus (COVID-19) pandemic and then strongly 2020, amid severe pandemic-related lockdowns
WHY: rebounding last winter. across much of the world.
Demand for the super- While winter weather across much of Asia is The latest rally has been attributed in large
chilled fuel continues currently expected to be mild over the coming part to conditions in Europe, where low gas
to rise, while supply months, there are now concerns that the coming inventories have combined with rebounding
has been somewhat winter could mark a repeat of 2020-21, espe- demand and constrained LNG imports. How-
constrained. cially if temperatures end up being lower than ever, domestic factors in Asia, such as high
expected, pushing up heating demand. And demand from utilities in China, are also contrib-
WHAT NEXT: indeed, some countries, including major LNG uting to the situation.
Colder-than-expected buyers China and South Korea, are expected to On a barrel of oil equivalent (boe) basis, the
winter weather could experience lower-than-average temperatures. cost of LNG has now come close to $190 – more
exacerbate the situation than twice the level the Brent crude benchmark
over the coming months. Record high is currently trading at.
Price agency S&P Global Platts said on Septem- The fact that the price of LNG has risen even
ber 30 that its Japan-Korea-Marker (JKM), a as the weather remains relatively mild for now
benchmark for spot LNG contracts, had risen to has prompted concern over how supply and
$34.47 per million British thermal units ($953.44 demand trends will play out once winter arrives

P6 www. NEWSBASE .com Week 40 07•October•2021