February 23, 2018 / 4:46 PM / 9 months ago

GLOBAL LNG-April prices rise on tender results, production setbacks

Feb 23 (Reuters) - Asian spot LNG prices for April delivery rose this week amid renewed Japanese purchases and as supply from the United States continued to lag, but the Lunar New Year kept Chinese buyers sidelined.

Spot prices for April LNG-AS delivery in Asia were assessed at $8.40 per million British thermal units (mmBtu) this week, 50 cents above last week’s levels.

However, there was uncertainty around the strength of demand, with buyers cautiously appraising needs and even sellers exercising restraint in a recent Japanese tender, potentially indicating they expect prices to rise further.

Tohoku Electric is estimated to have paid $8.30-$8.40 per million British thermal units (mmBtu) for a cargo due on April 5-20, traders said.

The utility is understood to have received only a handful of offers, prompting speculation by some that sellers did not want to lock themselves into a deal amid the risk of prices rising later.

Japanese LNG trading giant JERA took an April cargo for an estimated $8.30-$8.50 per mmBtu, traders said.

In India, Gail and GSPC both sought March deliveries.

Loadings from the U.S. Sabine Pass plant continued to drag following a reduction in feedgas flow into the facility.

Jason Lord, an LNG analyst at Genscape, said the feedgas flow reduction was due to a reduction in storage capacity at the site, after federal regulators ordered operator Cheniere Energy to shut two of five storage tanks.

Another bullish factor is the late winter burst of cold lifting gas prices across northwest Europe.

Prices in Europe’s biggest gas markets surged 50 percent this week ahead of a cold snap that will test the region’s reduced supply options and make price spikes more likely as stocks run low.

This might trigger competition for Atlantic Basin LNG cargoes with Asia if European demand stays elevated and prices hold ground, though Asia remained the premium destination.

Reporting by Oleg Vukmanovic in LONDON; Additional reporting by Jessica Jaganathan in SINGAPORE, editing by David Evans

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