LNG Bunker Snapshot: Prices fall amid hopes of de-escalation in Middle East conflict
Singapore-ARA spread narrows to $147/mt
TTF falls on warmer weather, easing tensions
JKM drops amid lower geopolitical risk
Weekly changes in LNG bunker prices:
- ARA down by $68/mt to $1,420/mt
- Singapore down by $100/mt to $1,567/mt
- Baltics down by $70/mt to $1,525/mt
- Portugal down by $211/mt to $1,608/mt
ARA
Rotterdam’s LNG bunker price declined for the second consecutive week, falling by $68/mt week-on-week to $1,420/mt.
The decline was primarily driven by an approximately 2% drop in the front-month Dutch TTF Natural Gas contract over the week. TTF is Europe’s benchmark gas price.
The decline in TTF prices came amid “forecasts of warmer weather and expectations of easing tensions in the Middle East on progress in US-Iran talks,” according to the Japan Organization for Metals and Energy Security (JOGMEC).
The recent fall in gas prices can be attributed to the "reemergence of negotiations on the Strait of Hormuz", said International Energy Agency (IEA) gas analyst Greg Molnár.
Last week, during the United Nations General Assembly (UNGA) summit, Iran proposed to reopen the Strait of Hormuz subject to certain conditions. However, US President Donald Trump rejected the proposal on Sunday. Subsequently, officials from both the countries held separate talks with negotiators on Monday, raising hopes of renewed efforts to end the conflict in the Middle East.
Molnár added that after a full stop in August, around 12 LNG carriers have passed through the Strait of Hormuz this month, while 13 LNG carriers went dark (no signal), which could indicate that they are preparing for the risky transit.
These developments have contributed to downward pressure on TTF prices.
The TTF front-month future has fallen over the past week, as the market remains hopeful about both the increasing number of ships appearing to pass through the Strait of Hormuz and the mild autumn weather currently prevailing in Central and Western Europe, Mind Energy said.
Meanwhile, EU underground gas storage stood at 70.6% on 25 September, up from 69.3% a week earlier, but remained 14.6% below the year-earlier level, according to data from Gas Infrastructure Europe.
Singapore
Singapore’s LNG bunker price has declined more sharply than the ARA price, narrowing its premium over ARA to $147/mt from $179/mt a week earlier.
Singapore’s LNG bunker price typically tracks the front-month NYMEX Japan/Korea Marker (JKM), which has fallen by $1.70/MMBtu ($88/mt) to $25.82/MMBtu ($1,342/mt).
The decline in JKM was driven by a reduction in the geopolitical risk premium amid expectations of easing tensions in the Middle East, following the passage of LNG tankers through the Strait of Hormuz and continued US-Iran dialogue. Expectations of limited spot demand in Northeast Asia also weighed on prices, as buyers appear to have already made progress in securing supplies for winter demand, JOGMEC said.
“The decline followed indications that direct US-Iran discussions remained possible,” said oil and gas analysts at research firm BMI.
Prices for LNG in Asia “were dragged lower by the fall in crude oil prices last week,” added ANZ Bank’s senior commodity strategist Daniel Hynes.
In other LNG bunker-related developments, Norwegian shipping company Höegh Autoliners has ordered six LNG dual-fuel pure car and truck carriers (PCTCs) from China Merchants Heavy Industry’s Jiangsu yard.
Luxembourg-based logistics company Compagnie Luxembourgeoise de Navigation (CLdN) has placed an order for two LNG dual-fuel vessels with South Korean shipbuilder HD Hyundai Heavy Industries.
By Tuhin Roy
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