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Weekly Summary

LNG: Jun 3-7: Prices move volatile

--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery prices ranged from $11's to the level slightly below $13.00. In the wake of the "jumpy" Netherlands' TTF market, prices showed a very volatile move. Amid this, sell orders from China stood out in the market.

Recently, selling interest from Chinese players were growing. On Jun 5, PetroChina offered a total of three cargoes. Offers were heard at a discount of 10cts to the July contract of DES Northeast Asia spot quotations for mid-July delivery and at a premium of 15cts to quotations for late-July delivery. An early August delivery cargo was offered at a premium of 5cts to the August contract of quotations. In China, rising temperatures caused natural gas demand to gradually increase but a Japanese company pointed out, "They still have excess cargoes at the moment and are trying to resell them in the spot market." For other end-users in China, China National Offshore and Oil Co (CNOOC) had sold two August delivery cargoes via its tender closed on Jun 3.

The move to buy cargo for the summer demand season has been continuing. Tohoku Electric Power Co bought cargo delivered to Niigata or Sendai on Aug 19-21 via a buy tender last week. The company, which has a short position basically, is required to buy cargo in the spot market for the delay in the restart of the 825 MW No. 2 unit at Onagawa nuclear power station.


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

In Egypt, gas supply had become scarce and fertilizer companies apparently had no choice but to stop using gas temporarily. This was because gas demand for air-conditioning was strong along with a rise in temperatures while domestic production for natural gas was dwindling.


--FOB Atlantic, DES Europe and South America

The Sleipner gas field in Norway on Jun 3 stopped operation to repair pipeline cracks to connect the field, which in turn halted operation at the Nyhamna gas processing plants, decreasing natural gas shipments from Norway by around 15% compared with normal. On Jun 4, it was announced that the Sleipner gas field as well as the Nyhamna gas processing plant would resume operation on Jun 7. During the period, TTF market was very volatile. In response to this, James Whistler, managing director at Vanir Global Markets, said, "The high volatility we are seeing underscores the market's nervousness, largely driven by geopolitical uncertainty, particularly concerning Russian piped gas flows to Europe."


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