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Asia Natural Gas Prices Rising

Asia Natural Gas Prices RisingAsia Natural Gas Prices Rising

Asia's liquefied natural gas prices are set to go up on the back of surging oil prices and tightening supplies, according to analysts.
It comes at a time when demand for LNG is set to shoot up in Asia, driven by China's appetite for natural gas as it seeks to replace coal, CNBC reported.
If China—the world's number 2 importer of natural gas—imposes tariffs on LNG exports from the US, it may cause Chinese buyers further pain in the short run, the experts said. But that could also alter supply chains in Asia and benefit other producers, they added.
Prices of Asia's natural gas jumped this year—in tandem with crude—as most of the region's long-term LNG contracts are linked to oil prices, Rajiv Biswas, Asia-Pacific chief economist at HIS Markit, told CNBC.
"With world oil prices having moved higher in recent weeks as US sanctions on Iranian oil exports will be implemented in November, this is contributing to further upward pressure on Asian LNG contract prices," he added. 
Average Chinese gas import prices jumped 23% compared to a year ago in the second quarter, while Japanese contract prices were up 17% in the same period.
When US sanctions on Iran kick in next month, they could push oil prices to above $90 per barrel, some analysts predicted. During Asian trade on Tuesday afternoon, Brent crude was at $81.04 per barrel, and US crude futures at $71.84 a barrel—up from above $60 per barrel at the start of this year.
Asia's spot LNG market—which has been growing steadily—will also be hit in the short term. Biswas expects Asian spot prices to move even higher to $11.85 per million British thermal units (mmBtu) by January 2019. Spot prices for the October delivery in Asia were at $11.40 per mmBtu, up 30 cents in a week, according to a Aug. 24 Reuters report.

 

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