Asia spot LNG prices fall for first time in over two months

(Reuters) - Asian spot LNG prices dropped slightly for the first time in more than two months this week over expectations of weak demand, amid easing concerns around supply due to tensions in the Middle East.

The average LNG price for June delivery into north-east Asia LNG-AS rose to $10.20 per million British thermal units (mmBtu), falling off the over three month-highs it hit last week, industry sources estimated.

Asia LNG prices, which scaled a 15-week high this month, have either been largely flat or increased week-over-week since March. The rally in LNG prices has curbed Asian buyers' demand for spot cargoes, industry officials say.

"The prospect of a runaway escalation (in Middle East tensions) appears to have receded but has not disappeared, as have the TTF and Asian spot prices," Rystad Energy analysts said in a note on Friday.

Rystad said the delay in restarting Japan's 1.1 gigawatts (GW) Higashidori nuclear reactor could drive demand for replacement fuels including natural gas. Despite China's factory activity in March growing for the first time since September, overall downstream gas demand remained weak, the analysts said.

"Despite some bullish signals towards the northern summer, the upside risk remains capped due to weak demand in price-making regions," Rystad said.

The markets largely shrugged off a gas leak at Norway's Hammerfest terminal this week, which took place during a brief period of planned maintenance, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

"LNG delivered prices in Europe and northeast Asia have fallen back from their recent rally, with losses in both markets largely underpinned by weaker European gas hub prices as expectations for heating demand in the region waned," Good said.

S&P Global Commodity Insights assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in June on an ex-ship (DES) basis at $9.252/mmBtu on April 25, a $0.15/mmBtu discount to the gas price at the Dutch TTF hub.

Atlantic LNG prices have seen support from supply concerns, including a recent trip to Freeport LNG's Train 3 liquefaction unit on April 23, said Margaret Rogers, senior editor at S&P Global Commodity Insights.

"Subdued feedgas volumes in the U.S. coupled with maintenance in Norway and cooler temperatures in Europe have kept prices elevated in the region, with EU natural gas storages witnessing net withdrawals for two consecutive days," Rogers said.

Argus assessed the June delivery price at $9.2/mmBtu.

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