High inventory levels at South Korean and Japanese utilities continue to cap demand, despite forecasts of high temperatures in the coming weeks. As of April 23, major Japanese power utilities held 2.56 million tonnes of LNG in storage, versus 1.96 million tonnes in late April 2022, and the five-year average of 1.95 million tonnes in late April 2023, according to consultancy Rystad Energy. "Tokyo and Seoul have each been forecast to see a brief spell of high temperatures in the coming couple of weeks, but this has not spurred any significant LNG purchasing, while southern China broadly appears set to keep seeing below-average temperatures until the second half of May," said Samuel Good, head of LNG pricing at commodity pricing agency Argus. In Europe, S&P Global Commodity Insights assessed its daily Northwest Europe (NWE) LNG Marker price benchmark for cargoes delivered in June on an ex-ship (DES) basis at $9.739/mmBtu on May 11, a discount of $1.375/mmBtu to the June gas price at the TTF Dutch gas hub, said Allen Reed, managing editor, Atlantic LNG. "The past week has been the first stretch of sub $10/mmBtu prices since June 2021. The market has been weak due to tepid buying in both the Atlantic and Asia-Pacific basins. This has combined with mild European weather and strong European gas storage levels," Reed said.
"However, there was some renewed buying interest in Europe this week that has narrowed the discount of the LNG market to the natural gas market," he said, which brought the Northwest Europe spread between natural gas and LNG to their narrowest point since mid-March.
On LNG freight, Pacific spot rates softened this week, falling to $45,500 per day on Friday, its lowest levels since the summer of 2022, said Edward Armitage, an analyst at Spark Commodities. Atlantic rates fell to $40,000 per day on Friday. (Reporting by Sudarshan Varadhan and Emily Chow in Singapore; Editing by Shilpi Majumdar)
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