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Asian spot liquefied natural gas (LNG) prices remained at their highest level in over seven months, tracking European gains amid concerns over supply disruption.
The average LNG price for September delivery into north-east Asia was at $12.90 per million British thermal units (mmBtu), industry sources estimated. This is the highest level since mid-December and up from $12.80/mmBtu last week.
"Asian prices rise this week has largely been underpinned by the European gains, with north-east Asian LNG demand remaining tepid despite hot weather in much of the region, particularly South Korea which is also facing a few unplanned nuclear outages," said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Above-average temperatures are forecast in South Korea, Japan, as well as China’s Beijing and Shanghai in the coming week, which could support strong cooling demand. However, south-east China - where much of gas-fired generation capacity is situated - could return to normal temperatures in the coming weeks, leaving little scope for a late summer jump in power demand, Good Said.
Gas demand remains high enough in Asia to attract cargoes, said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence, adding that current price levels might withhold price sensitive buyers from the spot market.
Dozeman said that the latest La Nina weather pattern forecast has weakened, which might help to decrease next winter's gas demand in Asia and North America compared to earlier forecasts.
In Europe, gas prices have risen this week on heightened geopolitical risk in the Middle East and after Ukraine mounted a surprise incursion into Russia's Kursk region, where Russian natural gas flows into Ukraine.
The benchmark front-month contract at the Dutch TTF hub traded at 40.25 euros earlier on Friday, its highest level since Dec. 8.
"While deliveries through the point have been little changed, traders remain concerned that the near -40 million cubic metres per day of gas that passes through Sudzha could be affected, leaving an incentive for some to adjust their trading positions in a bid to avoid being short of gas were prices to spike," Argus' Good said.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in September on an ex-ship (DES) basis at $12.676/mmBtu on Aug. 8, a $0.15/mmBtu discount to the September gas price at the Dutch TTF hub.
Spark Commodities assessed the price at $12.717/mmBtu, while Argus assessed it at $12.700/mmBtu.
Atlantic LNG freight rates rose for the first time in a month to $75,250/day on Friday, while the Pacific rates rose for the seventh week running to $86,750/day, said Spark Commodities analyst Qasim Afghan.
(Reporting by Marwa Rashad; Editing by Nina Chestney)