Low Demand, High Supply Keeps Asia LNG Spot Prices Flat

Asian spot liquefied natural gas prices started the year steady, as muted regional demand and ample supply kept the market flat following a 34% slump in 2025.

The average LNG price for February delivery into Northeast Asia LNG-AS was estimated at $9.60 per million British thermal units (mmBtu), unchanged from the previous week, industry sources said.

"Market conditions remain relatively calm and are largely dominated by bearish sentiment," said Siamak Adibi, director for gas and LNG supply analytics at consultancy FGE, adding that LNG supply in December likely reached new record levels of 42 million tons despite outages at LNG Canada and Freeport LNG in the U.S.

"Weak Asian demand has allowed Europe to absorb spot cargoes more comfortably," he added.

The year-end holiday season has also curbed trading activity, with warmer-than-average forecasts in many Asian and North American cities keeping a bearish sentiment on gas and LNG price outlooks for early January, said Masanori Odaka, Rystad Energy's senior analyst.

"The arbitrage for U.S.-origin LNG to Asia is deeply shut, meaning Europe will likely continue to receive U.S.-origin LNG for most of the first quarter of 2026," he said.

"LNG spot prices in Asia will have to rise by more than $1/mmBtu relative to LNG prices into Europe for this situation to change."

S&P Global Energy assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $9.112/mmBtu on December 31, a $0.535/mmBtu discount to the price at the TTF hub.

Argus assessed the price at $8.64/mmBtu, while Spark Commodities assessed it at $9.173/mmBtu.

While milder temperature forecasts and a slower rate of December withdrawals have eased immediate pressure, Europe entered winter with materially lower storage levels than recent years and needs to pull in significant waterborne LNG volumes through January and February to stay balanced, said Aly Blakeway, manager of Atlantic LNG at S&P Global Energy.

The continent's reliance on LNG is set to deepen, as Russian pipeline gas and LNG are phased out and regasification capacity continues to expand, added Blakeway.

"With a wave of uncontracted LNG supply expected to hit the market from 2026 and competition intensifying for European regasification slots, LNG–TTF spreads could widen further as Europe cements its position as the sink for surplus global LNG."

In LNG freight, Atlantic rates fell to $71,750/day, while Pacific rates slipped to $55,000/day, said Spark Commodities analyst Qasim Afghan.

The U.S. front-month arbitrage to Northeast Asia via the Cape of Good Hope closed out further this week, pointing more strongly to Europe, while the arbitrage via Panama has also closed out and is pointing once more to Europe, Afghan added.

(Reuters)