• XPD
    1478 USD -0.78%
  • XPT
    1048 USD 0.64%
  • ALU
    2243.47 USD -2.23%
  • RICE
    18 USD -1.75%
    74.17 USD -1.32%
    14.35 USD -0.66%
  • NG
    2.27 USD 0.27%
    256.22 USD -1.15%
    70.04 USD -2.02%
  • XAG
    23.96 USD -0.14%
  • XAU
    2010.5 USD 0.48%
  • XCU
    3.73 USD -1.34%

LNG sinks lower after winter – rebound is unlikely

The discount prices in LNG futures are attracting Asian buyers as the prices are below $2. Europe will have less to fill this year in terms of LNG stockpiles.

Asian demand is taking advantage of the low prices of LNG

The spot LNG market in South and Southeast Asia is beginning to see some activity again as prices have dropped from all-time highs in August to levels not seen in nearly two years. In search of cheaper LNG imports, India, Thailand, Pakistan, and Bangladesh were more involved in the global marketplace in March than they were in February.

Based on tanker-tracking information and industry participants, Chinese demand increased in March even though the full-year LNG import outlook for 2023 is still undetermined. LNG demand is fuelled by South Asia and China.

LNG imports increased in March compared to February in China, India, Bangladesh, Pakistan, and Thailand, according to statistics from Kpler reported by Reuters’ Clyde Russell. Northern Asia, cut imports of liquified gas towards the end of the winter. This is typical for countries like Japan or South Korea, making the total Asian imports only marginally higher in March.

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Europe vs Asia in LNG

The southern buyers were drawn in by the discounts in the LNG market. According to estimates from industry sources cited by Reuters, spot LNG prices for May delivery averaged $12.50 per million British thermal units (MMBtu) in the week ending April 6th.

The cost of spot LNG will be heavily influenced by Europe’s appetite for the fuel. The majority of the expanding US LNG shipments continue to be attracted to Europe, which will want to store up on gas for the upcoming winter as it cannot count on the weather and a second straight winter of reduced gas withdrawals. 

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The good news for Europe’s attempts to fill up the storage in advance of the winter of 2023–2024 is that gas storage sites were more than 50% filled in April. This will be Europe’s second winter without a significant amount of Russian pipeline gas, although it hasn’t been a particularly lengthy or bitterly cold one. Now that more LNG import facilities have opened in Europe, the competition will be to draw as much LNG as possible.

The outlook remains bearish

Following Thursday’s fourth straight daily pullbacks, open interest increased by approximately 8,000 contracts in light of CME Group’s advanced data for the natural gas futures markets. Contrarily, volume decreased by around 101,300 contracts, and the prior daily build was reversed.

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Natural gas prices ended Thursday’s trading session slightly over the crucial $2.00 level. The daily retracement occurred in the context of increasing open interest and creates the possibility of more deterioration in the near term, with the immediate objective always being the 2023 low of $1.97 per MMBtu.

As for Friday, the natural gas futures float below the psychological $2 level at $1.990, currently 1% down in early US trading. The bears will be aiming toward new long-term support in the $1.950 area, while the bulls will naturally want to break back above the $2 resistance.


Natural gas futures 1D chart, source, author’s analysis

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.


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