Asian liquefied natural gas prices surged to a record-high as global competition for the super-chilled fuel intensified amid low inventories and coal shortages.
The Japan-Korea Marker, North Asia’s benchmark for spot LNG shipments, surged to $34.47 per million British thermal units, the highest on records going back to 2009, according to price reporting agency S&P Global Platts. European gas prices, which Asian rates have closely followed this year, also broke records on Thursday. Prices for heating and power-generation fuel are surging around the world as utilities rush to restock lower-than-average inventories ahead of winter in the northern hemisphere, while alternatives -- like coal -- are also in short supply. Export constraints from Norway to Malaysia, coupled with robust Asian demand, have left little of the fuel available.
“The global LNG price rally is largely driven by the European gas situation,” said Ciaran Roe, global director of LNG at S&P Global Platts. The price rally for the super-chilled fuel brought its cost close to $190 a barrel of oil equivalent. That’s more than twice the level international benchmark Brent crude is trading on Thursday.
Unlike previous record-breaking price spikes, this one is happening while temperatures are still relatively mild, illustrating the extent of the supply crunch. Frigid winter weather could send Asian LNG prices surging threefold from current levels, according to Citigroup Inc.
“Lower temperature forecasts than average in China and South Korea have led to greater end-user buying interest,” Roe said.
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