GLOBAL LNG-Asian spot prices rise on geopolitical tensions, slow demand caps gains

By Emily Chow

Sept 12 (Reuters) - Asian spot liquefied natural gas (LNG) prices inched up this week, lifted by geopolitical developments around Russian sanctions and tensions in the Middle East, though muted demand and high inventories in the region capped price gains.

The average LNG price for October delivery into Northeast Asia LNG-AS was at $11.50 per million British thermal units (mmBtu), up from $11.30/mmBtu last week, industry sources estimated.

The price for November delivery was estimated at $11.60/mmBtu.

Asian LNG prices were largely tracking the geopolitical premium seen in European gas prices rather than Asian fundamentals, said Kpler analyst Go Katayama, adding that negotiations by the European Union and the United States around fresh sanctions on Russia, and Israel's escalation targeting Hamas leaders in Qatar had pushed risk premiums higher.

"Northeast Asian demand remains muted. Stocks are high across Japan and Korea, and the November temperature outlook remains mild. Pacific LNG supply remains robust," said Katayama.

High inventories, soft heating demand and steady Pacific supply are likely to limit upside potential, he said.

Meanwhile, a fourth tanker carrying LNG from the sanctioned Arctic LNG 2 project in Russia has berthed at the Beihai LNG Terminal in Guangxi, southern China, show shiptracking data. China has received three cargoes from the sanctioned project so far via the same import terminal.

In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for cargoes delivered in October on an ex-ship basis at $10.556/mmBtu on September 11, a $0.59/mmBtu discount to the October futures price at the Dutch TTF hub.

Argus assessed the price at $10.49/mmBtu, while Spark Commodities assessed it at $10.545/mmBtu.

"Northwest European delivered prices rose slightly this week, tracking small gains in the TTF prices," said Xiaoyi Deng, Argus deputy head of LNG pricing, adding that traders were holding prices at current levels for geopolitical risks.

"Small revisions and additions of maintenance at the Norwegian upstream system also added to the caution in the market, but changes are limited and flows from Norway to continental Europe have stayed low because of ongoing maintenances."

The U.S. front month arbitrage to Northeast Asia via the Cape of Good Hope is still only marginally incentivising U.S. cargoes to deliver to Europe, while the arbitrage via Panama has closed out, said Spark Commodities analyst Qasim Afghan.

In LNG freight, Atlantic rates were steady at $29,000/day on Friday, while Pacific rates fell to $31,500/day, he added.