Global LNG-Asia spot up on South America drought demand
Friday, 18 January 2013
PERTH: Asian liquefied natural gas (LNG) <LNG-AS> climbed to over $18 per million British thermal units (mmBtu) this week as South American buyers, especially Brazil, continued to snap up cargoes to compensate for cuts in hydroelectric power capacity due to drought.
Brazil's LNG imports increased 18.6 percent compared to December 2012 and 82.2 percent from the same period a year ago, according to Waterborne LNG analysts.
With Petrobras buying emergency supplies to plug the energy gap created by the drought, Asian LNG spot prices for February delivery rose to the high $17 per mmBtu level, while prices for March deliveries have jumped above the $18 per mmBtu level.
But the Brazilian buying spree may be short-lived, with the country's energy minister saying this week that summer rains mean the government sees no need to increase emergency natural gas imports further.
Cold weather in Asia also bolstered prices, with Japan's utilities consuming 1.4 percent more natural gas in December than a year earlier to compensate for the shutdowns of all but two of their 50 nuclear reactors.
In South Korea, the world's second largest LNG importer after Japan, state-run Korea Gas Corp (KOGAS) said its domestic gas sales in December rose 15.2 percent year-on-year.
However, South Korea's imports of LNG for 2012 dipped 1.2 percent on the year.
In Europe, British day-ahead gas prices hit an 11-month high on Thursday as sub-zero temperatures drove up demand, while supply was disrupted from domestic fields.
Italy's natural gas imports from Algeria, which make up one-third of of its supply, returned to normal on Friday after an assault by Islamist gunman forced the country's third-largest gas field shut on Thursday.
In the U.S., natural gas futures were higher at just over $3.50 per mmBtu after a bullish weekly inventory report and fairly cold forecasts for the next 10 days that should force homeowners and businesses to turn up their heaters. (Reuters)