Asian spot gas prices have fallen below British wholesale levels for the first time since May 2010, according to ICIS data.
The ICIS East Asia Index (EAX) for March 2015 settled at US$6.85/million Btu on 4 February, below the British March 2015 hub price of US$6.92/million Btu.
On the same date in 2014, the EAX March 2015 price stood at US$19.84/million Btu, with the British equivalent contract at US$9.90/million Btu.
The ICIS Japan front-month spot price was assessed at its lowest level since June 2010, at US$6.875/million Btu.
Weak gas demand
"A combination of weak winter gas demand across key importing Asian countries, additional global production and lower oil prices have hit market sentiment with spot prices falling fast," explained Ed Cox, editor at ICIS Energy.
The ICIS EAX is an average of spot price assessments for Japan, South Korea, Taiwan and China. The assessment reflects the price of LNG imports, which are the dominant form of supply for Japan, South Korea and Taiwan.
East Asian spot prices have traded at a large premium to Europe in recent winters amid high weather-driven demand, nuclear outages in Japan and higher oil prices. Oil prices directly determine the price of a majority of long-term LNG contracts in East Asia.
British front-month gas prices are currently approximately 30% cheaper than at this time last year. British demand has been lower than usual over the winter because of mild weather and lower consumption from the fuel generation sector.
British gas demand stood at just over 79 billion m3 in 2014, down from over 85 billion m3 in 2013.
LNG imports accounted for approximately 25% of UK gas supply between October 2014 and February 2015. The UK sources most of its gas from domestic production and imports from Norway.
Adapted from press release by Katie Woodward
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/04022015/asia-spot-prices-fall-below-british-levels-181/