Singapore: Asian prices for liquefied natural gas (LNG) rose to their highest since February this week, pushed up by a rise in Asian imports and higher prices in Britain.
Asian spot LNG prices LNG-AS were valued around $5.50 per million British thermal units (mmBtu) by traders, about one-third higher than their 2016 lows from April.
Traders said that prices were being supported from both the physical and the financial markets.
Financial markets were volatile this week after Britain's vote to leave the European Union.
With the British pound falling against other currencies, UK gas prices were pushed higher across the curve. That lifted Asian spot LNG prices since international gas traders increasingly look towards Britain's gas market for guidance as it can take in supplies from multiple sources, including continental European pipelines and overseas LNG imports.
Also, Qatar's RasGas this week signed an agreement with France's EDF to deliver up to 2 million tonnes per year of LNG to EDF's new terminal in Dunkerque starting in 2017, pulling supply away from Asian markets.
Prices were also supported by firm Asian demand. Driven by upticks in Japanese, Taiwanese and also Chinese imports, LNG shipments into North Asia have risen from weekly levels of around 3 billion cubic meters (bcm) to 4 bcm between mid-May and mid-June, according to Thomson Reuters Eikon data.
While demand rose, available supply in Angola and Australia tightened slightly, traders said.
With the opening of the extended Panama Canal last week, traders said LNG markets would become better connected and, eventually global, as it would improve trade flows between the Atlantic and Pacific basins.
"The expanded Panama Canal increases LNG's reach and flexibility," Singapore's exchange SGX said on Friday.
The 75,000 deadweight tonne British Merchant LNG tanker, loaded with gas from Trinidad & Tobago, is scheduled to be the first LNG tanker to travel through the expanded Panama Canal.
But traders said that recent gas price rises might not last, with downward pressure building in both Europe and Asia.
With the start of the monsoon season, likely lasting through September, traders expect lower LNG orders from India.
In Europe, analysts said that recent price rallies might also fizzle out.
"The rally in European... gas prices is unlikely to be sustained and we expect global gas prices to remain low in an oversupplied market over the second half of 2016," analysts at BMI Research said.
"Markets have tightened in recent months but global supply is still robust at a time when there is limited demand-side pressure on prices," they added.
