Asian gas buyers scent lower prices

Crude oil prices have collapsed after months of being held up by the invisible thread of geopolitical tension. This will depress contract prices in Asia in the near term, and should filter through into lower short-term LNG prices this winter compared with last year.

Spot prices are affected by marginal changes in the supply-demand balance. The advent of LNG exports from ExxonMobil’s Papua New Guinea plant was felt over the summer, as the two trains at the 6.9 mtpa plant came onstream earlier than expected. With ample gas in store in Japan and Korea, spot prices dropped to as low as $10/MMBtu – $3-4/MMBtu below a year earlier.