--DES Northeast Asia

In the DES Northeast Asia market last week, prices for second-half January delivery fell to the low $16's owing to the ample supply. As a matter of fact, the number of sellers was gradually increasing and spot supply was plentiful. German RWE could sell two cargoes for early January delivery. Marubeni and European Mercuria also showed selling interest for first-half January delivery. These sellers indicated their offers at a premium of $2.10-2.50 to the January contract of DES Northeast Asia spot quotations. Some sellers for second-half January delivery were observed as well. European Gunvor and German Uniper offered late January delivery at discount levels or flat to the January contract of DES Northeast Asia spot quotations. European Vitol showed its bid for a cargo for mid-January delivery to China at a discount of $1.00 to the January contract of DES Northeast Asia spot quotations but offered a cargo for mid-January delivery to Northeast Asia at a discount of 15cts to the January contract of DES Northeast Asia spot quotations. Besides that, as reported, Kansai Electric Power Co was seen to have sold an early January delivery cargo at a discount of 70cts to the January contract of DES Northeast Asia spot quotations on Nov 20 or 21. The company was said to have also sold a Jan 22 delivery cargo at a discount of 20cts to the January contract of DES Northeast Asia spot quotations early this week.

On the demand side, Chinese factories would halt operations for two or three weeks before and after the Lunar New Year holiday starting on Feb 10, gas demand mainly for industrial use was expected to drop. In addition, with many people going back to hometown, the number of drivers for trucks would be scarce, according to a Chinese end-user. The end-user pointed out, "If the domestic LNG market surges, drives might remain cities. But considering ample supply for natural gas, such a case will unlikely happen." As a result, most end-users in China focused on having reasonable inventories and were not keen on spot procurement. The Chinese end-user perceived that unless the DES Northeast Asia market dropped to $12.00-13.00, buying interest would not be stimulated.

--FOB Middle East, DES South Asia and the Middle East

Indian state-run Petronet LNG will float a buy tender that closed on Nov 28. Through the tender, it plans to buy a cargo for second-half December delivery to the 17.50 mil mt/year Dahej terminal. In the Middle East, state-run Oman LNG appeared to ink a contract starting 2026 for nine years with British BP. The volume in the contract was reportedly 1.00 mil mt/year. While prices in the contract were not reported, "Brent linked prices might have been employed in the contract" (a Japanese company) was heard in the market.

--FOB Atlantic, DES Europe and South America

The European Commission has started discussions to extend a price cap for natural gas for a year among member countries of the European Union (EU). The price cap aims to set up the upper bound of natural gas prices in the region through banning TTF futures trading when the prices exceed about $50 per mmBtu in a three-day row. However, some countries, such as Germany, appeared to oppose the regulation, citing the reason that the regulation might prevent LNG from being imported. In South America, the gas consumption volume for power generation by Chile during the period from Nov 1 to 20 was 421,000cbm, just 41% compared with a year earlier.