CORRECTED-GLOBAL LNG-Asia spot prices at 8-week low on high inventories, weak demand

By Marwa Rashad

LONDON, Nov 28 (Reuters) - Asian spot liquefied natural gas prices hit their lowest level in eight weeks on continued muted demand and high inventories, tracking a drop in European gas prices on hopes of a Ukraine peace deal.

The average LNG price for January delivery into north-east Asia LNG-AS was $10.90 per million British thermal units, down from $11.66/mmBtu last week, industry sources estimated.

"Rates have continued to soften, buying remains muted, mostly from muted physical demand and weak fundamentals," said Toby Copson, managing partner at Davenport Energy.

"Weather is going to dictate movements as temperatures have fluctuated but haven't been consistently low enough to generate provincial buyers back to the spot market," he said.

Prices in Asia are expected to remain bearish next week amid high inventories, weak Korean gas-for-power demand and muted South and Southeast Asian spot activity, said Ronald Pinto, principal gas and LNG analyst at data analytics firm Kpler.

Robust Pacific supply and Japan's approval of the Kashiwazaki-Kariwa restart further cap upside, he said, referring to news that Japan's Kashiwazaki-Kariwa nuclear power plant, the world's biggest, could be restarted as soon as January pending consent from regional authorities.

In Europe, gas prices remained around 18-month lows, falling below the 30 euros per megawatt hour mark.

"News about renewed attempts for a U.S. brokered peace deal between Russia and Ukraine have spurred this decline in anticipation of a relaxation of sanctions on Russia," said Florence Schmit, energy strategist at Rabobank.

"While this market move may be premature, it sets the tone where prices are heading in 2026 already," she added.

Kpler's Pinto said bearish momentum is set to continue next week for EU gas prices, as warmer weather, stronger wind output and ample LNG and pipeline supply ease regional balances, while market awaits Russia's response to the US-Ukraine plan.

A peace deal between Russia and Ukraine could lead to an unsanctioning of supply from Russia's 19.8 million metric tons per annum Arctic LNG 2 terminal, said Martin Senior, head of LNG pricing at Argus.

Demand has emerged from Turkey, with Botas seeking four cargoes through a tender having already bought four earlier in the week for the first quarter of next year. Additional demand has also emerged from Egypt, with the firm having bought four cargoes for December deliveries, Senior said.

S&P Global Energy assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in January on an ex-ship (DES) basis at $9.467/mmBtu on November 27, a $0.46/mmBtu discount to the price at the TTF hub.

Argus assessed the price at $9.485/mmBtu, while Spark Commodities assessed the December price at $9.416/mmBtu.

Hedge funds flipped into a net short position in TTF futures last week, for the first time since March 2024, said independent gas analyst Seb Kennedy.

"This is a significant development so early in the heating season, and suggests funds believe there will be enough LNG on the water to mitigate even the harshest of winters," Kennedy said.

The U.S. front-month arbitrage to north-east Asia via the Cape of Good Hope is strongly pointing to Europe, while the arbitrage via the Panama Canal is marginally pointing to Asia, said Spark Commodities analyst Qasim Afghan.

Global LNG freight rates in the Atlantic rose to $146,750/day, its highest level year-to-date. Pacific rates recorded the highest level since December 2023, at $89,250/day, he added.