Asian spot LNG prices fell 3% to around US$17.3 per million British thermal unit (MMBtu) on 31 October, as sellers lowered their offers, following an initial spike in mid-October, Rystad Energy said in its latest note on Wednesday.

 

For the first time since the start of front-month Asian spot LNG index pricing for December delivery on 16 October, the LNG price differential in Asia between December 2023 and January 2024 is now in backwardation by approximately US$0.84 per MMBtu as of 31 October.

 

However, this is mainly due to the front-month price having already priced in half of the total 22-pricing days for the index, said Rystad.

  

Storage and arbitrage

 

Underground storage facilities in Europe are nearly at full capacity with December's Title Transfer Facility (TTF) prices falling 9% to approximately US$14.9 per MMBtu on 31 October.

 

The arbitrage opportunity for US-origin LNG was mainly open from 16-22 October, with some Japanese importers such as Tohoku Electric able to buy LNG for late-December 2023 delivery, with LNG from the Atlantic Basin also being offered in Asia, said Rystad.

 

However, the above-mentioned arbitrage closed, making it less economically attractive for holders of US-origin LNG to direct cargoes towards Asia, noted the research company.

 

While some Japanese importers purchased LNG for upcoming winter delivery in the latter half of October, other Asian countries have shown reluctance to buy LNG recently, according to Rystad's analysis.