Asian spot prices for liquefied natural gas topped $30 per million British thermal units, a level last seen in December 2022. The jump follows a report of an attack on an LNG tanker off Yemen. European storage is only 74% full, adding pressure on buyers.
Asian spot prices for liquefied gas topped $30 per million British thermal units for the first time since December 2022, Bloomberg reported. The move followed a report about a strike on an LNG tanker in the Gulf of Aden, off the Yemeni coast.
Tanker attack clouds Middle East flows
The UK Maritime Trade Operations outlet reported an LNG carrier coming under attack in the Red Sea from a small boat, whose crew fired twice at the tanker. The tanker's crew fired warning shots in return, UKMTO said on Saturday. The report suggests a return to normal energy flows out of the Middle East is not forthcoming.
Even so, Bloomberg reported on Monday that a tanker carrying LNG from Qatar was crossing the Red Sea en route to Poland. QatarEnergy has a long-term supply deal with Poland's Orlen, and it has been trying to service such contracts despite a force majeure on exports issued soon after the war between the U.S. and Israel and Iran began. According to Bloomberg, the Red Sea route could hasten deliveries to Europe, but the heightened risk of attacks could discourage stronger flows.
Winter demand squeezes Asia and Europe
LNG has been trading above $25 per mmBtu for about a month as demand picks up ahead of the winter heating season. Asia and Europe are locked in a race to secure as much gas for the winter as they can, regardless of prices.
Because Qatari gas is scarce, Asian LNG demand is declining amid high prices, while Europe is paying up for supply. Yet European storage sites are only 74% full this week, against a five-year seasonal average of around 89% at this time of year.
The latest price jump could dampen Asian demand further, with less wealthy nations turning increasingly to coal. Europe does not really have that option, since EU member states shut down many coal power plants as part of decarbonization efforts, leaving them no choice but to pay any asking price for liquefied gas.
Source: Investing.com
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