MILAN, Aug 8 - Asian spot liquefied natural gas (LNG) rose
for the first time in six months as tentative signs of a demand
pick-up emerged from buyers in India, Brazil and Dubai while
Australia awarded its latest supply tender.
Prices rose as spot market activity remained constrained by
healthy stocks at key consuming countries.
Spot LNG LNG-AS for September delivery climbed to $10.60
per million British thermal units (mmBtu) this week, compared
with $10.50 per mmBtu last week.
Prices in Asia, the world's biggest buyer of the shipped
fuel, have plunged close to 50 percent since hitting winter
peaks of $20.50 per mmBtu in February.
Traders said that Brazil's state-run Petrobras had bought
four cargoes so far. It chartered vessels to pick up two cargoes
from Qatar and a cargo apiece from Spain and Nigeria, one source
The importer, whose demand for LNG is triggered by irregular
rainfall depleting the country's hydroelectric reserves, is said
to have some demand for October and November delivery, a
separate trader said.
Middle Eastern gas importer Dubai also shows some signs of
demand, while India's Reliance, GSPC and Gail are also showing
demand further out.
Australia's North West Shelf project awarded at least a
cargo apiece to Shell and Norway's Statoil following a recent
tender, traders with knowledge of the matter said.
The NWS sell tender for four cargoes loading in October and
November was launched last week. Early indications suggested
that other companies might also have won shipments.
The transaction value was around $12 per million British
thermal units on a free-on-board basis, one trader said.
Attention was shifting to trading for October loading
cargoes. Some players were looking for floating storage as they
expect a jump in prices once heating demand picks up in
countries such as Japan, South Korea and China towards the end
of the year.
Trading house Glencore and German utility E.ON are among
those betting on a rebound in the market in the winter, leasing
LNG tankers for storage purposes. Several other market players
were taking the same view, chartering tankers for three to six
months, a shipping source said.
The play is triggered by a market structure known as
contango, in which prices for immediate delivery are cheaper
than later months. Spot prices for the first half of October
were about 50 cents higher than for September.
Unlike crude oil, storing LNG on tankers is unusual and
generally seen as a risky bet, given the high costs and the fact
that cargoes degrade over time by evaporating.
(Reporting by Oleg Vukmanovic; editing by Jason Neely)