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Asian spot prices on the rise

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LNG Industry,

Reuters are reporting that Asian spot LNG prices climbed higher this week, albeit from low levels, as tight production supported a market undergoing fundamental changes.

Spot price for May delivery of LNG in Asia rose by 5 cents to US$5.75 per mmBtu as seasonal tightness supported the market.

Global LNG supplies have dipped slightly below demand, although analysts announced that this was likely only a temporary effect as several production units go into maintenance.

LNG markets are undergoing fundamental changes, as a growing number of supplies are coming to market, forcing producers to offer their buyers more flexible terms in order to retain market share.

Following months of rising pressure from big buyers in Japan, South Korea and China, major producers including Royal Dutch Shell, Woodside Petroleum, and BP have announced that they would allow more supply flexibility in future contracts.

With supplies expected to outstrip demand in the coming years, many producers are expected to sell excess cargoes into the spot market, while more contract flexibility means that utilities may also start selling more LNG into the spot market.

Some producers are warning that the current glut will end in the early 2020s due to a lack in investment because of low prices.

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