Asian LNG prices usually have a premium over European gas prices, especially in winter when Asian demand jumps. But as temperatures in Asia have been unseasonably warm this winter Asian gas stocks have remained full, which has dragged prices in December and January in Asia below the winter price level in the past two years.
Wholesale front-month gas prices in Britain opened on Wednesday at around $7.25 per million cubic metres (MMbtu), rising to above $7.30 later in the day, Refinitiv Eikon price data showed.
Meanwhile in Asia, Anglo-Dutch Shell lowered its offer for March delivery in the Platts window from $7.45/MMbtu at 0759 GMT time to $7.10/MMbtu at 0826 GMT. Other buyers in the window did not go that low, however. At the time of the offer, British front-month gas price was at around $7.25/MMbtu.
The UK gas front-month price fell by the end of the trading session to $7.07 at 1630 GMT. But its premium over the Asian LNG price for some time has prompted some traders to start redirecting the delivery of LNG cargoes to northwest Europe from Asia.
For example, Swiss-based trader Vitol changed on Wednesday the destination of two LNG cargoes sourced in the United States to northwest Europe from Asia due to the discount of Asian prices compared to those in Britain, an industry source familiar with the matter said. The cargoes are for delivery in February and March.