European natural gas prices have declined due to warmer weather forecasts, while Asian LNG buyers are focusing on February and March deliveries.
The front-month Dutch Title Transfer Facility (TTF) prices fell 7 per cent to US$13.8 per million British thermal units (MMBtu) on revised warmer forecasts.
Asian spot LNG prices for February delivery decreased by 3 per cent to around US$14.4 per MMBtu on January 8, with expectations of settling at approximately US$14.3 per MMBtu.
This price movement reflects the current market dynamics, where Asia has sufficient LNG supply while Europe continues to attract US LNG cargoes.
Rystad Energy’s senior analyst, Masanori Odaka, provided insights into the current gas and LNG market situation, stating: “Europe continues to draw LNG cargoes from the US, while Asia has sufficient supply.
“With Norway’s Snohvit extended by 10 days to 19 January, it may incentivise further LNG flows into Europe.
“So far in 2025, Europe has imported 3.2 Mt of LNG, with more than half of that amount (2 Mt) originating from the US.
“We anticipate that most US LNG cargoes will continue to flow into Europe, as arbitrage economics remain more favourable for European delivery compared to Asian delivery.”
The extended maintenance at Norway’s Snohvit facility until January 19 could potentially support prices and encourage additional LNG imports to Europe.
This situation, coupled with the current arbitrage economics, suggests a continued trend of US LNG cargoes favouring European destinations.
In Asia, some buyers are seeking spot LNG for February and March delivery, including CPC Corporation, Thailand’s PTT, Bangladesh’s RPGCL, and Japan’s Tohoku Electric.
The market has seen a shift from backwardation to contango between February and March prices, indicating changing expectations for near-term supply and demand.
Despite the overall bearish trend, Japan is experiencing higher power prices due to colder temperatures in multiple regions.
The Japan Electric Power Exchange (JEPX) reported day-ahead prices 44 per cent higher than a year ago, reaching JPY 16.29 (US$0.10) per kilowatt-hour on January 9.
As the market continues to evolve, both European and Asian buyers will closely monitor weather patterns, supply dynamics, and arbitrage opportunities to optimise their LNG procurement strategies for the coming months.
