Column: Supply struggles, not just demand, are fuelling LNG's price surge: Russell | Reuters
The rally in spot liquefied natural gas (LNG) prices in recent weeks has been framed as being led by robust demand in Asia and in Europe as the northern hemisphere deals with hotter-than-usual temperatures.
Although this certainly has a strong influence on prices, the narrative has downplayed issues surrounding supply of the super-chilled fuel, with declining volumes being shipped by major producers such as Australia, Qatar, the United States and Russia.
All four of these top exporters shipped less LNG in June than in May, and in some cases the June volumes were multi-month lows, according to data from commodity analysts Kpler.
The weekly spot price of LNG delivered to north Asia ended at $12.55 per million British thermal units (mmBtu), down from the six-month high of $14 the prior week.
However, futures contracts linked to the benchmark S&P Global Platts JKM index ended last week on a positive note, rising to $13 per mmBtu on July 9, up a second consecutive day but below its recent high of $13.23 on July 1.
On an annual basis, spot prices are massively higher, but this is largely a reflection of the collapse in demand for LNG in the middle of last year as economies across the globe were locked down as part of efforts to battle the coronavirus pandemic.
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