Two major tender awards this week underscored Asian markets' demand. Papua New Guinea LNG (PNG) sold a November cargo at around $8.50-$8.60 per mmBtu, while sales of January and March cargoes fetched a premium, traders said. "January was the highest price in the high $8's, slightly below 15 percent of Brent," a trade source said.
PNG launched a four-cargo sell tender recently for two November-loading cargoes and one cargo apiece in January and March. At the same time, Chinese state-run energy giant CNOOC concluded its four-cargo buy tender, paying about $8.40 per mmBtu for November supply. Unexpectedly strong Chinese demand has helped spur spot prices 55 percent higher from their 2017 lows, but some trade sources say PetroChina and CNOOC are well covered until January, potentially moderating price gains.
"When Asian players close their positions that's when Indian buyers come in, betting that the market will fall. we've seen it before," the trade source said. Three Indian prompt buy tenders are currently active. Gujarat State Petroleum Corporation (GSPC) is seeking two cargoes, Gail India wants three across November and December, and Reliance Industries also seeks supply. However, high prices can be a turn off for Indian buyers with tender cancellations common, traders said. Taiwan's state-run power utility CPC may also have demand for a November-January delivery.
Copyright Reuters, 2017